Security Pacific Corp., the nation's eighth-biggest bank company, wants to buy most of the operations of Commercial Credit Corp., the Baltimore-based financial services subsidiary of Control Data Corp.
William F. Ford, vice chairman of Security Pacific, said the Los Angeles-based bank company has been negotiating with Control Data since November, when the computer company put Commercial Credit on the block.
"We're getting closer and closer," Ford said in a telephone interview from San Diego. "But closer is not closed." He said it could be weeks or months before a deal is consummated or negotiations break off.
A spokesman for Control Data said that the company has been in serious negotiations with a number of potential purchasers, but said the company would not identify them or say how close the company is to closing a deal.
Control Data, which is based in Minneapolis, bought Commercial Credit in 1968 to provide a source of financing for the parent company. In those days, most computers were leased, not sold. Now, however, the computer business is mainly a cash-sale industry, and owning a financial subsidiary is not crucial to a computer manufacturer.
But Control Data's computer business has been hurting in recent years, and the big injection of cash it would obtain from a sale of the profitable Commercial Credit is needed. Although the finance company has been profitable, its earnings took a beating in the first quarter because of $21 million in losses incurred by a privately insured Ohio savings and loan association it owns. City Savings & Loan Co. of Lima lost the $21 million it had on deposit in the Ohio Deposit Guarantee Fund -- which was wiped out when Home State Savings Bank of Cincinnati closed in March.
Control Data hoped to sell Commercial Credit for about $1 billion, but at the company's annual meeting Wednesday in Minneapolis, officials told shareholders they would be willing to take $844 million -- the value of Commercial Credit on Control Data's books.
A spokesman for Control Data said the computer manufacturer would prefer to sell Commercial Credit as a complete unit.
Because of federal banking laws, Security Pacific could not purchase the entire company. Ford said the bank company could not buy Commercial Credit's casualty insurance company, its securities brokerage firm and its real estate brokerage firm.
But Ford said the bulk of Commercial Credit operations would be a perfect complement to the types of financial services Security Pacific engages in -- including commercial and consumer finance companies, fleet leasing and factoring (purchasing accounts receivable from smaller companies that need the cash faster than their customers pay their bills).
Ford said Commercial Credit's operations in Britain would more than double Security Pacific's presence there, and he said the bank company also would like to own Commercial Credit's joint ventures in Europe.
Commercial Credit had assets -- mainly loans and leases -- of $7.4 billion at the end of last year. The finance company earned $50 million. The parent, Control Data, had profits of $32 million on revenue of $5 billion. The company predicted Wednesday that Control Data would earn a small profit at best in the second quarter because of a depressed computer business -- even though Commercial Credit's profits were expected to rebound from the Ohio problem.