After months of inactivity, First Maryland Bancorp announced today that it has dropped its $17 a share bid for Baltimore Bancorp, the parent company of the Bank of Baltimore.
Jeremiah E. Casey, chairman of First Maryland, said the bank holding company is withdrawing the offer because of the worsening market for bank stocks in the last six months. "We believe that our cash offer of $17 per share is no longer appropriate," he said in a press release. The offer had amounted to $217 million.
When First Maryland first made its offer on April 27, Baltimore Bancorp stock had been trading at $10.25 a share. Since then, Baltimore Bancorp's stock has dropped to $5.75 a share, where it closed yesterday. The purchase had been conditioned on examination of Baltimore Bancorp financial records by First Maryland.
First Maryland, the parent company of First National Bank of Maryland, is the state' second largest bank and is owned by Allied Irish Banks PLC of Dublin, Ireland. Baltimore Bancorp is the fifth largest Maryland bank.
To pay for the proposed acquisition, Allied Irish had raised 162 million Irish pounds, the equivalent of $263 million, in a stock rights offering made in late April in Ireland.
At Baltimore Bancorp's annual meeting on May 16, angry stockholders had lambasted the company's management for not negotiating with First Maryland.
But after the meeting, Baltimore Bancorp's board of directors unanimously rejected the First Maryland offer, saying it was a bad time to sell a bank because of the depressed stock prices and that it would hurt the company's employees and the local community.
After the annual meeting, disgruntled stockholders said they would try to call a special meeting to override the board of directors, but nothing came of the effort.
T. Rowe Price Associates Inc., a larger Baltimore mutual funds company that owns 9.4 percent of Baltimore Bancorp stock, had filed with the Securities and Exchange Commission in September to allow the company to talk with other stockholders about possible action. But Baltimore Bancorp challenged that filing before the Federal Reserve Board, contending that Price was illegally exerting a controlling influence.
For its part, First Maryland had continued to say that the offer was still on the table.
Despite dropping the offer, First Maryland said it would still be open to exploring a merger with Baltimore Bancorp if the company changes its position, the press release said.
Jack Haigh, president of Baltimore Bancorp, said the company had seen newspaper reports from Ireland that Allied Irish had been losing interest in the possible merger. "The climate for any kind of merger is not the best in the world," he said.