Directors of Glen Burnie Bancorp yesterday moved to block a hostile takeover by First Mariner Bancorp by voting to issue stockholders rights to purchase additional shares.
The defensive step, known as a "poison pill," is designed to make it too costly for First Mariner to take control of the $225 million-asset Bank of Glen Burnie.
The move comes after First Mariner's chairman, Edwin F. Hale Sr., the Baltimore shipping executive, sent a letter to Glen Burnie Bancorp's board offering to buy out the bank for about $26 million in cash, or $23.80 a share.
Glen Burnie Bancorp directors rejected the offer in a faxed letter to Hale about a week ago. First Mariner already owns 4,580 shares of the company's stock, and it recently entered into an agreement to purchase 170,883 shares, bringing its stake to 19.5 percent. That deal is expected to close in three weeks.
The plan is "designed to deter coercive takeover tactics and to prevent an acquirer from gaining control of the company [by] offering a fair price to all of the company's stockholders," said F. William Kuethe Jr., Glen Burnie's president and chief executive, in a statement.
Kuethe said in an interview that he doesn't want "somebody to steal the bank."
"We just don't want to be put in the position where he [Hale] is going to be put in the driver's seat. We are not actively trying to be sold now. If push came to shove, we would want a fair price," Kuethe said.
The move was expected by Hale.
"This is exactly what Bank of Baltimore did when they were trying to keep me out in 1991," said Hale, referring to the successful proxy battle he waged to gain control of the troubled company. "It backfired on them."
Hale said he also made an offer in March 1997 for the company, but it, too, was rejected.
Glen Burnie stockholders would "have almost doubled their money" if the bid had been accepted, Hale said.
Hale said he is unsure if he will launch a proxy fight for control of the company, which holds its annual meeting next month.
To derail Hale's efforts, Glen Burnie Bancorp has hired New York-based Skadden Arps Slate Meagher & Flom, known for its work in mergers and acquisitions.
Through the issuance of rights to buy additional stock, the plan is designed to make it so costly for First Mariner, or any other bank, that a deal would be virtually impossible.
The rights will be distributed as a dividend to stockholders of record as of Feb. 13.
Glen Burnie's stock has slipped over the past two years to $24.75 a share from the $33 range.
Pub Date: 2/18/98