Merger favored, MNC says Proxies said to back NationsBank deal

June 10, 1993|By David Conn | David Conn,Staff Writer

Despite some grumbling from disaffected shareholders, i appears MNC Financial Inc. has the support of enough stockholders that a merger with NationsBank Corp., at $15.17 a share, is practically a done deal.

The company said yesterday that it had received enough proxy forms to approve the proposed $1.36 billion takeover. The official results will be tallied and announced at MNC's annual shareholders' meeting this morning -- likely the Baltimore company's last. The festivities at the Omni Inner Harbor Hotel begin at 10 a.m.

"We feel we're doing very well, with voting results continuing to come in," said MNC spokesman Daniel Finney, "and at this point we're in excess of the two-thirds we need."

The agreement that MNC's board of directors signed with NationsBank a year ago requires at least two-thirds of all of MNC's outstanding shares be voted affirmatively for the merger, rather than merely two-thirds of the number of votes cast. The company has about 90.3 million common shares outstanding.

Bankers around town have been preparing for the arrival in force of Charlotte, N.C.-based NationsBank for some time. "I think that NationsBank is going to be a formidable competitor," said Peter Martin, president of Provident Bank of Maryland, and an alumnus of Equitable Bancorporation.

"They're very large, and we community-based banks are going to have to use all the advantages we have," said Mr. Martin, who left Equitable a few months after it was bought by MNC in 1989.

Edwin F. Hale Sr., chairman of Baltimore Bancorp, parent of the ** Bank of Baltimore, said the merger "is just another example of taking the headquarters out of Baltimore and making it a branch town."

Baltimore Bancorp's top executives have been meeting for the past few months with large borrowers, attorneys and other financial executives to assure them of their bank's ability to be responsive, Mr. Hale said. "We happen to be one of the few that's left here," he said, "and we hope to take advantage of it."

But some were unconcerned about the loss of what used to be one of Baltimore's strongest corporate citizens. "It's not necessarily badnews," said Walter Sondheim Jr., acting president of the Greater Baltimore Committee. "There's been a lot of assurance given that there's not going to be a change, and that any changes made will be for the better," he said.

Assuming the deal goes forward, NationsBank has said the merger would take place in September or October. MNC shareholders would be given the option of exchanging their shares either for NationsBank stock or for cash, as long as the total $1.36 billion payment consists of 50.1 percent stock and 49.9 percent cash. There's a chance, therefore, that some people might end up with a form of payment they don't want.

Several MNC stockholders have complained that the deal grants MNC Chairman Alfred Lerner and one other large shareholder, Fidelity Investments of Boston, a guaranteed exchange of stock if they want it, while others must take their chances.

Without that guarantee, some shareholders who bought MNC at a price lower than $15.17 run the risk of incurring a capital gains tax bill if they receive cash. The exchange of stock is expected to be tax free.

"I always thought all shareholders were equal," said Howard S. Kaylor, who owns more than 26,000 shares of MNC. "I don't mind being a NationsBank shareholder, I just don't want to hold cash."

"I still maintain the price isn't what it should be," said Mr. Kaylor, a senior vice president of Ferris, Baker Watts Inc. "After all, they're getting the largest [banking] franchise in Maryland, and that ought to be worth something."

Mr. Lerner says he didn't ask for the stock guarantee, granted by NationsBank Chairman Hugh L. McColl Jr.

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