NCNB's Offer Gets Rejection From Target --- Citizens & Southern Defense To Rely Mainly on U.S., State Bank Regulations
ATLANTA -- The board of Citizens & Southern Corp., bracing for a fight, rejected NCNB Corp.'s $39-a-share, or $2.4 billion, buy-out offer.</br></br>Citizens Chairman Bennett A. Brown, citing financial advice from First Boston Corp., said NCNB's offer was "clearly inadequate" for Citizens' shareholders, customers and employees. "We have managed this bank . . . for long-term value to shareholders-not for a quick sale," he said.</br></br>In composite trading on the New York Stock Exchange yesterday, Citizens' common stock closed at $34.75 a share, down $1.125, and NCNB closed at $35.75, up 25 cents a share. The board meeting ended after the market had closed.</br></br>In rejecting the NCNB bid, Citizens invoked a Georgia anti-takeover law. But as its main defense, Citizens will, at least for now, rely on federal and state banking regulations to defend itself, according to H. Rodgin Cohen, a partner at Sullivan & Cromwell and a chief architect of Citizens' takeover defense. Beyond antitrust questions, the Federal Reserve is expected to scrutinize the relative strength of NCNB's balance sheet, which Citizens' said is weaker than its own, and the depth of NCNB's management.</br></br>The Internal Revenue Service is expected to take a hard look at the tremendous tax benefits NCNB reaped in its takeover of First RepublicBank Corp. of Dallas last summer, Mr. Cohen said. He suggested that NCNB could lose those tax benefits in the regulatory review that would result from its attempt to buy Citizens.