The hostile takeover attempt of Community Bank of Oak Park River Forest by one of its biggest shareholders has failed.
Elk Grove Village-based First American Bank launched the takeover attempt in October, accusing Community Bank of self-dealing through a discounted stock sale to members of the bank’s leadership and their friends, while leaving out First American and other shareholders.
In late September, First American offered to pay shareholders $134.32 per share in an effort to capture a 51 percent ownership stake in the bank. But First American Chairman and CEO Thomas Wells said in a recent email that the bank failed to receive the requisite votes from shareholders.
“Accordingly, we’ve returned the stock tendered and cancelled the offer,” Wells said in an email.
Community Bank’s leadership also responded by email: “We are pleased to know that in rejecting First American’s unsolicited tender offer that our shareholders support the current strategic direction of the bank and our commitment to our shareholders, employees and community.”
“As we celebrate our 20th anniversary in the coming year, we look forward to opening new branches in Oak Park and River Forest and are thankful for the support that we receive from our community who have been the foundation of our success,” Community Bank President and CEO Walter Healy said.
It is unclear whether the takeover attempt has or will prompt future takeover efforts by other banks. Crain’s Chicago Business originally published the story about the takeover attempt, speculating that First American’s effort could arouse interest from other banks to attempt a takeover of Community Bank.
First American said in its offer letter that it would “support any cash offer at a value equal to or greater than the valuation proposed in our offer if it is made to all stockholders by Oct. 22, 2016 and will close by May 20, 2017, contingent only on the OPRF board’s willingness to support our offer in the event theirs fails to materialize or close.”
Community Bank did not go into detail about the accusations made concerning self-dealing in its response to Wednesday Journal’s inquiry concerning the failed takeover. But in October, the bank defended its various discounted sales of additional stock.
“The granting of stock options is a standard practice at many community banks and are an important way to attract, retain and motivate high-quality employees,” the company’s leadership wrote in the October press release, noting that the bank “sought and received stockholder approval” for the stock options.
Community Bank leadership also said in the October press release that between 1996 and 2011 First American provided data processing services for Community Bank and was paid roughly $5.5 million for those services. When the local bank terminated that contract with First American, the bank demanded Community Bank repurchase its shares.
“In addition, beginning with the company’s 2012 annual meeting of stockholders and continuing at each meeting thereafter, FABC has voted against every other proposal made by management at such stockholders’ meetings,” Community Bank’s leadership wrote in October.
Wells at First American said the loss of the contract had nothing to do with the takeover attempt.