UnionBanCal Corp said a $3 billion bid by Mitsubishi UFJ Financial Group Inc for the 35 percent of the U.S. bank the Japanese company does not already own is too low.
A special committee of UnionBanCal's directors said on Wednesday that Mitsubishi UFJ's $63 per share offer substantially undervalues the bank and is not in the best interests of its minority stockholders.
The committee also disputed Mitsubishi UFJ's characterization of discussions between the two sides over the last few months, saying it had been willing -- and remained open -- to engaging in talks.
Mitsubishi UFJ, Japan's largest bank, went public with its offer for UnionBanCal on Tuesday, saying its attempts to start negotiations over the past
several months had been unsuccessful.
It plans to launch a cash tender offer for the shares on Aug. 18, but has said it remains open to talks.
In April, Mitsubishi UFJ quietly proposed a purchase price of $58 per share, but the San Francisco-based bank's committee decided it was too low.
In its latest statement, the committee said an uncertain outlook for the banking sector should not "inappropriately" affect its value. It said the challenges facing other banks were creating opportunities for UnionBanCal.
UnionBanCal, which has a market value of nearly $8 billion, last month reported a nearly 15 percent slide in net income on higher provisions for bad loans.
But the bank has largely avoided the subprime mortgage meltdown that has hurt other U.S. regional lenders.
"The proposed price does not reflect the strength of UnionBanCal's strong capital position, the superior credit quality of its assets, and its potential for profitable asset and core deposit growth in the current market environment," said Richard Farman, chairman of the committee.
UnionBanCal shares closed down 50 cents at $65 on the New York Stock Exchange. Trading above an offer price often implies that investors believe the offer will be raised.
Buying UnionBanCal, parent of Union Bank of California, will give Mitsubishi UFJ full control of one of the 25 largest banks in the United States in terms of assets. The bank had 334 branches in California, Oregon and Washington as of March 31.
A spokesman for Mitsubishi UFJ said on Tuesday that having full control of the U.S. bank would make it easier to implement group strategy, but declined to give specifics.
Mitsubishi UFJ, which has a market capitalization of almost $90 billion, has been struggling to boost profitability at home. It reported a 66 percent slide in first-quarter net profit earlier this month and forecast virtually no growth for the year ahead.