First West Bank Merger from a Savant Perspective

INTRODUCTION

According to Ed Mierzinski (2010), “Bank mergers take away competitors and create bigger banks. However, studies have shown that bigger banks have bigger fees.” This quote brings much understanding to the thought process and the bottom line of many businesses in today’s world. This section will seek to explore in depth the merger and acquisition transaction or events between First West Bank and Interrregional Bank from a SAVANT perspective. These events include the discussed possibility of a merger, the public announcement of the proposal, competition entering the bidding process, the offer being increased, the SEC ruling and the acquiring of Interregional bank.

The Meeting (Negotiation)

The meeting began on September 7th, 2000 as First West CEO Paul Hayes approached CEO David Stuart about the possibility of a merger. The process typically begins with the acquiring company carefully and discreetly buying up shares in the target company. When First West and Interregional first met the initial offer was turned down. Interregional felt that First West’s strategy was not in line with theirs, but Hayes was already set in acquiring the Interregional bank. As we give a brief synopsis of what is actually going on in the meeting it would be best to define what exactly are mergers and acquisitions and what they entail.

According to the Reserve Bank of Malawi’s (2010) guidelines to the M&A process, “a merger is the amalgamation or fusion of two separate banks into a legal entity. In a merger, the merging banks combine to form a new bank (pp.5).” Banwo-ighodalo (2006) agrees and adds that the term merger appears to be one of imprecise definition. It has variously described as a situation where two or more companies of approximately equal size come together with the share holders and directors of both companies supporting the combination and continuing to have an interest in the combined business. An acquisition on the other hand is a more definite term,...