Page 344 - מיזוגים ורכישות - פרופ' אהוד קמר תשפב

goodwill claim if and when such claim is finally resolved. Golden State retained a 15
percent portion of the recovery in order to provide it with a continuing incentive to pursue
the litigation. Golden State was acquired by Citigroup in 2002, and the litigation-related
warrants converted into warrants exercisable for Citigroup stock.

The choice of the technique to be used will be dictated by the specific facts and
circumstances in each case.

B. Tender Offers

Where regulatory approvals can be obtained on a rapid basis or where formal
prior approval by a bank regulator is not required at all (as may often be the case for
nonbank acquisitions by financial holding companies), the tender offer structure offers
the potential to avoid the other time-consuming step in consummating most public
company bank deals: a shareholder meeting to vote on the merger (with related proxy
statement filings and potential review by the SEC). This structure, most common in the
nonbank sector, recently made its return as a viable alternative to the single step merger
for both strategic and private-equity transaction structures and is discussed in Chapter 7.

II. Factors Influencing Choice Of Structure

A. Capital Requirements

Capital has always been vital to financial institutions and to banks in particular.
Because payment in cash (or debt securities) has the effect of diminishing capital, stock is
often the primary consideration paid in financial institutions transactions of substantial
size. Cash deals are often seen when speed of consummation relative to a stock deal is
an issue, where a cross-border deal is involved, or where there is a significant size
disparity between the parties. Part-stock, part-cash structures, particularly among mid-
sized transactions, have become a fixture in the industry as companies seek to optimize
capital management, pro forma earnings accretion and other factors. However, stock and
stock value will still be the key to many significant acquisition programs. Officers of
financial institutions with a history of acquisitions speak of their organizations’ stock as
their "currency," and carefully analyze the effect that a particular transaction will have on
that currency.

For banks, it is advisable for an acquiror to develop a close and open relationship
with the Board of Governors of the Federal Reserve System (Federal Reserve) concerning
the adequacy of its capital position in light of its acquisition strategy. There is no bright
line test for the level of capital that the Federal Reserve will require of acquirors, and
capital adequacy is tested on a case-by-case basis. The general policy enunciated by the
Federal Reserve is that bank holding companies planning "significant expansion
proposals" must have strong capital ratios "substantially above" regulatory minimum (12

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