Cathay General Bancorp of Los Angeles made a formal offer for Great Eastern Bank of New York on Tuesday, and analysts predicted that Great Eastern will take it.
Cathay said it would pay $58.44 a share, or about $101 million. Great Eastern would have to pay UCBH Holdings Inc. of San Francisco, whose offer it had already accepted, $5 million to break off their deal
Great Eastern, which has $310 million of assets, did not answer American Banker calls seeking comment. Cathay's chief financial officer, Heng Chen, would say only, "We're looking forward to being able to complete the merger."
UCBH officials did not return phone calls.
Scott Carmel, an analyst for Moors & Cabot Inc. in Boston, said that Great Eastern will probably accept Cathay's offer. UCBH had agreed to pay $97.4 million; Cathay's deal works out to about $2 a share more, Mr. Carmel said.
"Great Eastern's shareholders would be getting a good deal," he said. The price is 2.9 times tangible book, and "when looking at other deals between Chinese-American banks, it's at the high end of pricing."
In September, Cathay said that it had a deal to buy a 41% stake in Great Eastern and intended to negotiate with shareholders for the remaining 59%. Great Eastern's board viewed the plan as hostile; on Oct. 13 the board said it had made a deal with UCBH for $103.6 million (later reduced to reflect a lower estimate of the value of Great Eastern's own real estate).
Days later Cathay offered to buy the entire bank for $112 million, though it later said it would probably trim its offer after conducting due diligence.
All three banking companies cater to Chinese-Americans.
Analysts have already said that Cathay would probably win because it could easily block Great Eastern's deal with UCBH. Cathay has exercised options and intends to acquire 41% of Great Eastern's outstanding stock, which it could vote against the deal. Under New York law, the sale of a company requires approval from the holders of two thirds of the shares voted.
Lana Chan, an analyst at Bank of Montreal's Harris Nesbitt, said she expects the $7.3 billion-asset UCBH to walk away from the deal with the $5 million break-up fee.
"I think they're going to be disciplined about it. They believe they've already offered a pretty full price," Ms. Chan said.
She added that the prices Cathay and UCBH have offered could entice the eight other privately owned Chinese-American banks in New York to sell. "My concern, though, is that pricing expectations may have been increased by the bidding war over Great Eastern."
