Former Washington Star owner Joe L. Allbritton moved yesterday to gain control of the Washington area's largest financial institution with a cash offering for up to 600,000 shares of Riggs National Bank.
The move set up a potentially bruising takeover battle between the Texas millionaire and some of the area's oldest and richest families who long have had a major say in Riggs operations through their ownership of small blocks of stocks and seats on the board.
Allbritton appeared to catch the Riggs directors by surprise when he announced he had reached agreement to borrow money from an unnamed bank to finance most of the Riggs stock acquisition. The offer, at $67.50 a share, would cost him $42.75 million.
The additional shares would give him 35 percent of Riggs common stock, an amount regarded as a controlling interest by federal regulators.
Both Allbritton and Riggs took out newspaper advertisements, with Riggs advising its shareholders to sit tight pending an announcement by bank management on acceptance, rejection or no opinion about the takeover proposal.
But stock market analysts forecast yesterday that Allbritton woule have no trouble getting 600,000 shares in short order, with our without the blessing of the Riggs board and officers.
Allbritton also revealed yesterday that the bank's board already is on record against his purchase of additional shares. At a directors' meeting on Jan. 15, according to Allbritton, the board approved a resolution of welcome that expressed "pleasure" at his purchase of the large block of stock from director Jorge Carnicero, the chairman of Dynalectron Corp., of McLean.
The board resolution went on, however, to state: ". . . It is the view of this board of directors that it is not in the best interests of the Riggs National Bank for any person to own more than approximately 15 percent of the stock."
By purchasing 386,645 shares from Carnicero, Allbritton had increased his share of Riggs common stock to about 15 percent as of Jan. 22.
Allbritton's purchase offer yesterday also revealed a substantial disagreement with management over the future development of Riggs, which also owns Central Charge Service. He flatly opposed formation of a bank holding company, as proposed by management and is subject to approval by stockholders at the annual meeting. If he gets the shares he is seeking, he could block the management proposal.
Several brokers also saw the stock offer as evidence that Allbritton intends to install himself in the bank's top management, but the former Star publisher's formal proposal said he has turned down a management suggestion that he be nominated to the bank board at this time. "Subsequent to the offer, however, [Allbritton] may seek appropriate representation on the board" and "reserves the right" to change policies or management "if he deems it to be in the best interest of the bank, its stockholders and customers," the offer stated.
Riggs officials apparently were as surprised as the stock analysts by Allbritton's move. In a letter mailed to stockholders yesterday, Riggs Chairman Vincent C. Burke Jr. said Allbritton's plan is under consideration by the management and the board of directors. Burke did not comment on Allbritton's rejection of the holding company idea.
The Riggs board is scheduled to meet today and a bank press release said the Allbritton bid will be considered. Bank officials promised to announce a recommendation about acceptance rejection or neutrality on or before Feb. 23. However, Allbritton's offer yesterday said he would act on March 3 to buy 600,000 shares if they are tendered by Feb. 19.
Allbritton also left open the possibility that he will buy more than 600,000 shares if such stock is offered to him. The current offer expires at 10 a.m. March 10, but can be extended by Allbritton.
Investment analysts interviewed yesterday expressed a unanimous view that Allbritton would have little difficulty buying 600,000 shares from the general public. Riggs stock closed last week at $50 a share and shot up yesterday to $60 a share.
"We think it's a very attractive premium," said Ferris & Co. President George Ferris Jr., noting that the $67.50-per-share offer is about 14 percent higher than book value.
Federal government antitrust agencies, however, could place some roadblocks in Allbritton's path. Either the Justice Department or Federal Trade Commission may review the stock proposal through Feb. 24 -- or for an additional 10 days thereafter.