NEW YORK, OCT. 9 -- Irving Trust Co. today rejected as inadequate a $1.4 billion cash and stock buyout offer from Bank of New York Co. and sharply criticized the proposal as an "unwarranted attack."
Irving's board of directors also activated the company's "poison pill" antitakeover defense, which is intended to make any hostile buyout prohibitively expensive by giving stockholders the right to buy cheaply shares in an acquiring company.
Chairman Joseph A. Rice stated the board voted unanimously to reject the offer, which, if successful, would create the nation's 11th-biggest bank holding company.
Bank of New York, which holds about 4.9 percent of Irving's 18.1 million common shares outstanding, offered on Sept. 25 to pay cash and stock for all the shares it did not already own.
Bank of New York would pay $80 per share in cash for 47.4 percent of those shares and would swap 1.9 of its common shares for each of the remaining Irving shares. Based on current stock prices, the transaction would be worth about $1.4 billion.
Irving stock dipped 87 1/2 cents a share to $74.75 on the New York Stock Exchange today, while Bank of New York fell 62 1/2 cents to $42.12 1/2.
Hostile takeovers among banks are rare, but Bank of New York has indicated its willingness to press ahead with its offer despite opposition from Irving, also based in New York.
Owen Brady, a spokesman for Bank of New York, said his company had not had a chance to review the full text of Irving's rejection, but added that "as of this point, nothing has changed as far as we are concerned."
"We have said all along we would very much like to accomplish this on a friendly basis," Brady said.
The statement from Rice noted that after consulting its financial and legal advisers, Irving's board determined it was in the best interest of Irving's shareholders, customers and employes to remain independent.
The board said it had determined that Irving is worth more than the $80 a share offered by Bank of New York, given such factors as the rapid growth of its nonbanking, fee-based service businesses and its ownership of substantial undervalued assets, such as its Wall Street corporate headquarters.
"We believe that BNY recognizes these values as well and is unilaterally attempting to seize them," Rice's statement said. "Irving's shareholders, not those of BNY, should have the opportunity to realize the benefits we anticipate."
Rice criticized Bank of New York's proposal to sell a $5.5 billion chunk of Irving's assets to help finance the cash portion of its offer, characterizing it as "the very sort of hostile 'bust-up takeover' bid that has been widely condemned."
"Our board is also dismayed over the coercive, high-pressure tactics being employed by BNY," he said. "We are appalled that a board of directors of the independence and stature of BNY's would permit such unseemly hostility between our two institutions."