Investment brokers in New York and Washington reported yesterday that stockholders of Riggs National Bank have begun to turn in their shares in large amounts to financial agents of former Washington Star owner Joe L. Allbritton, who has offered $67.50 apiece for at least 600,000 shares in a bid for control of Washington's largest financial institution.
Meanwhile, no public statement was issued by the bank's officers or directors, as had been anticipated after directors adjourned a meeting late Tuesday. At least some directors were reported to have gathered for sessions Wednesday and yesterday, but it could not be determined if the formal meeting ever was resumed.
A secretary of Riggs Chairman Vincent Burke Jr. said he was "out of town" for yesterday and today. Riggs President Daniel Callahan III declined to say if directors had met or were meeting and said only that any board action would be announced when a decision is made. Two stockbrokers said last night that the absence of any announcement by Riggs indicated that "time is an [Allbritton's] side," although they also said the bank probably will make some recommendation later today.
As chances of a Riggs-Allbritton confrontation continued to grow since the financier started his surprise offer last Monday morning to increase his ownership to 35 percent, the element of risk escalated in investors' and brokers' decisions. Because the board has not acted to endorse Allbritton's bid, most analysts concluded that Riggs plans to fight.
Trading of Riggs stock was by far the biggest in recent memory yesterday, with the National Association of Securities Dealers listing a volume of 28,581 shares for an issue that often has traded a few hundred a week, although the volume total is inflated somewhat by double-listing on sales and purchases. Most stock sold yesterday was from Washington area investors as Riggs closed at $62 bid, up 50 cents from Wednesday.
Some brokers (called arbitrageurs) specialize in such purchases, expecting to buy at a few dollars below the price at which they plan to take advantage of a stock bid in the near future and making a quick profit. Their risk is that the deal may fall through.
Traders said that investors selling at this time are willing to take less than the cash offered by Allbritton because an instant sale is a sure thing while the bid for control of a major bank could be delayed by such unknown factors as a legal or regulatory challenge by Riggs management or the federal government.
At the same time, because of possible mail delays, many investors had decided by yesterday they could wait no longer to start the process of transferring shares while they look to Riggs Bank management for what advice -- if any -- is to be given stockholders by the historic bank's 25 directors.
The only Riggs response to Allbritton so far has been a letter asking stockholders to sit tight and wait for a recommendation of approval, rejection or neutrality. Financial firms representing Allbritton, meanwhile, were busy on the telephones yesterday soliciting shares.
Investors are faced with an initial deadline next Thursday and a mail system that does not guarantee quick delivery. If 600,000 or fewer shares are tendered to Allbritton's agents by 12:01 a.m. Feb. 19, all such shares tendered at that time and not later withdrawn will be purchased by the financier.
Thus, said one trader yesterday, investors who really want to take advantage of the Allbritton offer have an incentive to do so before the deadline. Once the 600,000 level or the Feb. 19 deadline is passed, Allbritton's firm offer is to buy up to 600,000 on a pro rata basis -- which means that from each shareholder tendering Riggs shares, only a certain percentage would be transferred.
All of this may be academic, however, because Allbritton also has stated that he may buy more than 600,000 shares if tendered. The general consensus of stock analysts and traders is that Allbritton not only will get the 600,000 but also that he will buy "anything" he can get, in the words of one broker.
And, traders noted, investors who decide to tender their shares now have lost nothing if a competitive bid is made for Riggs stock at a higher price because Allbritton's formal offering states that shares may be withdrawn prior to 12:01 a.m. March 3. That's a second deadline and the date on which Allbritton states that he will start acquiring stock if the federal government does not intervene.
A final deadline on the books is March 10, at which time Allbritton's current offer expires. But that deadline can be extended at his sole discretion.
The reported absence of Riggs Chairman Burke from Washington led several analysts yesterday to speculate that he and the board are seeking what is called a "white knight" in takeover parlance -- another investor who could compete in the financial big leagues that Allbritton has mastered.
But an overwhelming majority of the Riggs board already is on record as opposing any investor owning more than 15 percent of the bank's stock, the level currently in Allbritton's corner. Presumably the only way to remain consistent with this decision while opposing Allbritton would be to find several large investor parties to buy enough stock and stay in the fight in Allbritton offers more money.
Most analysts said yesterday they do not think such an approach would work. "There is certainly a possibility that someone else will come in, but the Riggs directors are really in a box," said a leading investment firm executive. "The way Allbritton has it worked out, it's all to his advantage. eHe's being very well advised. He's in a strong position since the directors have said nothing, and that means they have nothing to say, and time is on his [Allbritton's] side."
Allbritton has made arrangements for $50 million of bank loans -- mostly from one institution that is unidentified but said to have no material business ties to Riggs -- to finance his stock purchases. The biggest mystery in town last night, other than the final decision of Riggs management, was the identity of the bank helping Allbritton britton acquire control of the biggest bank in the nation's capital.