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A Thing Buyback


Up until 1996, National City Corporation fully owned NPC (National Processing). In 1996, National City took NPC public. Now, National City wants NPC back, but it doesn't look like it's going to be easy.

In June, National City offered to buy NPC stock for $9.50 a share. Unfortunately for them, a special committee of NPC directors rejected the offer, saying the price should be nearer to $16.50 a share. Less than half of NPC investors took advantage of the offer and since the offer was only good if National City received a majority of the shares it didn't already own, the deal was called off. "Since this condition was not met, National City has terminated the offer and will not purchase any shares pursuant to the offer," the company said in a statement.

What now? Well, National City can purchase NPC shares just like anyone else would. Then, once they have 90% of the shares (they have about 88% now) they could force a merger. Or, they could hold a special shareholders' meeting to approve a merger.

Why does National City want NPC anyway? Because there might be conflicts of interest between National City and NPC. National City said that its desire to accommodate all of a customer's needs might mean making little money on transaction processing. But, if NPC is an independent business, it would, of course, need to make money so National City needs to own NPC to justify the company's low earnings.

Watch for more about NPC in a future issue of The Green Sheet and in the November issue of GSQ.