After months of bitter, public wrangling, Suffolk Bancorp bought back 235,000 shares of its common stock from North Fork Bancorp., getting the Long Island archrival "out of their hair."
Suffolk agreed at the end of December to pay about $8.8 million, or $37.38 a share, for the stock, which represented about 6.2% of the Riverhead-based bank's outstanding shares.
The purchase, which also completed a 10% stock repurchase program that Suffolk had announced May 2, eliminates all of North Fork's holdings in Suffolk.
Mattituck-based North Fork reported a pretax gain of $2.4 million for the fourth quarter, yielding an after-tax gain of about 6 cents a share.
As part of the sale, North Fork agreed not to buy any shares of Suffolk or attempt to acquire it or influence its affairs for two years. Suffolk president and chief executive Edward J. Merz said he doesn't expect North Fork to renew its interest in Suffolk after the two-year ban.
"In one fell swoop, we were able to accomplish the elimination of the hostile takeover attempt and complete our buyback arrangement," Mr. Merz said. "We're very happy that this has been accomplished, and now we can go back to the business of banking - uninterrupted."
Suffolk's stock fell $4.75, to $32.75, when the deal was announced Dec. 28, and closed Friday at $31.50
"The Suffolk management got what they wished for, which was to get North Fork out of their hair," said North Fork president and chief executive John Adam Kanas.
He reported that the repurchase deal "represented a very substantial return on investment" for North Fork's shareholders.
The agreement follows months of public fighting between the two Long Island banks, fueled by North Fork's aggressive growth and Suffolk management's concern that Suffolk was a takeover target, not just an investment. Two months ago Suffolk instituted a shareholder rights plan, to be triggered when any person or group acquires 20% of the bank's stock.
"They finally realized that there was no real reason to pursue a hostile takeover in the face of a poison pill," Mr. Merz said. "The next best thing was to sell back their position."
North Fork began buying Suffolk stock in September 1995, but it drew Suffolk's ire last March with its application to the Federal Reserve Board for permission to buy up to 19.9% of the bank's shares, which was approved over Suffolk objections.
The bickering escalated in early September when Mr. Kanas criticized Suffolk for failing to justify why the bank should remain independent.