Though Gold Banc Corp.’s deal to sell to a Kansas investment group has collapsed, the Leawood, Kan., company still seems likely to sell itself within the next year.
The $4.2 billion-asset company terminated its deal with Silver Acquisition Corp. late Monday but said in a news release that under the $672 million agreement signed in February, it would not be required to pay a termination fee if it reaches a new sale deal in the next 12 months.
Eric E. Rothmann, an analyst with Howe Barnes Investments Inc. in Chicago, said the termination fee — $20 million, according to Highline Data LLC — would be a powerful incentive for Gold Banc to sell. He said large companies including Well Fargo & Co. or U.S. Bancorp may be interested in Gold, which has branches in Missouri and Florida as well as its home state.
Gold called off the deal after Silver, which offered $16.60 per share in February, sought to renegotiate the price to $15.25 a share. In a letter to Gold’s board last month, Silver said it believed that the recent settlement of a lawsuit in which Gold had agreed to pay $16 million had lowered the banking company’s value.
Mr. Rothmann said the decision to walk away from the deal means that Gold’s board is looking out for shareholders. Though the turmoil surrounding the deal has punished Gold’s stock in recent weeks, he said the company could still fetch between $15.50 and $16 a share.
“At that level, I still think both sides can walk away and everybody’s happy — most importantly, the shareholders,” Mr. Rothmann said. (Gold’s stock closed at $13.45 after heavy trading Tuesday, down 3.79% from Monday’s close.)
Gold’s announcement that it was walking away from the deal ended months of speculation about whether the sale would go through.
A shareholder suit filed in March claimed that Gold improperly sold 530,000 shares of stock to members of the board in the weeks leading up to the announcement of the deal with Silver Acquisition. It was dismissed in July. In June the company announced it had been named in a secret qui tam action, in which a private citizen can sue on behalf of the government. The plaintiff alleged that Gold had overcharged fees and interest on government-guaranteed agriculture loans.
Gold settled the qui tam suit in principle in August for $16 million. Meanwhile, regulators continued to delay approval of the deal as they sought more information about Gold’s troubles.
In press release Tuesday, Silver said Gold did not have a legal basis for terminating the merger agreement. Instead, Silver said because of Gold’s settlement of the qui tam suit and because of trouble in its bond portfolio, the company has not met earnings targets for 2004. Silver said the lowered price of $15.25 per share is fair given Gold’s current condition.
Silver also disputed Gold’s claim that it would not need to pay a termination fee on the deal and said that it would “reserve any legal rights it had in that regard”.
So what’s next for Gold?
Its president and chief executive, Malcolm “Mick” Aslin, did not return calls, but a spokesman said that the company would use the same strategy it had planned to use under Silver. It plans to focus on building up its retail business by expanding its relationship with the owners and employees of its commercial loan customers, said spokesman Sherman Titens.
