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Mellon board says 'No'
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April 27, 1998: 6:45 a.m. ET
Pittsburgh bank's board lines up against Bank of New York's $24B bid
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NEW YORK (CNNfn) - Backing up its management, the board of directors at Mellon Bank Corp. Sunday unanimously rejected a $24 billion buyout bid from Bank of New York Corp.
The vote came after Bank of New York launched an unsolicited bid for Mellon last Wednesday, following years of talks. The most recent round of merger talks fell apart late last year.
In a letter from its top executives to Bank of New York chief executive officer and chairman Thomas Renyi, Pittsburgh-based Mellon said its business strategies do not mesh well with those of Bank of New York and said that "nothing has changed since we determined to terminate discussions with you in December, except that you are now assuming dramatically higher cost savings to justify a premium."
" Bank of New York has neither a significant presence nor a noteworthy record of success in three other growth areas that are strategically important to us: asset management/mutual funds, personal trust and consumer financial services, which together comprise 48 percent of our total revenue," the letter said.
And in an interview with Reuters News Service Sunday, Frank Cahouet, Mellon's chairman and CEO, said, "this transaction is finished. This is the third time we have turned them down for a deal.''
Bank of New York has said it does not want to engage in a "hostile" bid for Mellon. However, the bank still apparently plans to take its offer - which was at a 28 percent premium over Mellon's closing stock price the day before the bid was made public - directly to Mellon shareholders.
According to the Wall Street Journal, Bank of New York said Mellon's large shareholders are supporting the bid.
Last Thursday, Mellon filed suit against Bank of New York in the federal court in Pittsburgh to block the buyout bid, Bank of New York used confidential information in previous merger talks in its newest offer.
Shares of Mellon (MEL) were off 7/8 at 75 on Friday. Bank of New York's stock (BK) fell 1-7/16 to 59-1/8.
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