Riggs National Corp. and PNC Financial Services Group Inc. remained "well apart" yesterday in negotiations over a purchase price for Riggs, said a source with knowledge of the talks.
PNC continues to maintain that Riggs is worth less than $20 a share, a price that Riggs's board is unwilling to accept, said sources familiar with the talks, who spoke on condition of anonymity because the negotiations are continuing.
The two companies expect to keep talking over the weekend and into next week.
PNC agreed to pay about $24.25 a share for Riggs in July, but that was before Riggs pleaded guilty last month and agreed to a $16 million fine for failing to file reports on possible money laundering by former Chilean dictator Augusto Pinochet and officials of the West African nation Equatorial Guinea. Also since July, several civil actions have been filed against Riggs and its officers and directors. The potential liability, in addition to large amounts of cash spent by Riggs on legal issues in the past six months, led executives at PNC to argue that the deal should not be made at a per-share price above the mid-teens.
Riggs representatives in the negotiations argue that such a price does not reflect the value of Riggs's retail banking network to an acquirer such as PNC, which would gain access to a high-growth market.
Riggs stock closed yesterday at $21.25 a share, down 60 cents. PNC closed at $54.20, up 56 cents.
Gary Townsend, who follows Riggs for Friedman, Billings, Ramsey & Co., said the most likely outcome would be Riggs selling to PNC at "a hair above $20."
But he continues to value Riggs at $21 a share, based on the likelihood of other buyers waiting in the wings. He cites Sovereign Bancorp Inc. in Pennsylvania; M&T Bank Corp. in New York, which owns a large, Baltimore-based operation and has branches in the D.C. area; and National City Corp. in Cleveland. He said Mercantile Bankshares Corp. of Baltimore could make a bid but is unlikely to given its recent announcement that it would acquire a Northern Virginia-based bank.
Townsend said M&T is the leading contender if the PNC deal falls through, based on M&T's rising stock price in the past six months and the likelihood that it could squeeze more costs out of Riggs because it already has operations here. He estimated M&T could offer $21 a share for Riggs and still increase its earnings per share in 2006.
Spokesman for both Riggs and PNC declined to comment.
