Irving Bank Corp. is backing a sweetened merger offer from Banca Commerciale Italiana SpA, which rival Bank of New York Corp. contends is still inferior to its own hostile bid. Irving said on Tuesday that its management had negotiated an amendment to the outstanding offer by Banca Commerciale, Italy's second largest bank, for 51 percent of Irving's common stock to include a dividend in the form of stock warrants to Irving shareholders. Irving said the sweetened offer made the overall transaction worth at least $79.50 per share, which the bank holding company's board of directors deemed superior to Bank of New York's ``best and final bid.'' Under a complex restructuring plan that also would include the sale of assets and a special cash dividend, Banca Commerciale has offered $80 cash a share for 51 percent of Irving's common stock, or a total of about $760 million. The new agreement also provides for Irving to distribute a dividend in the form of stock warrants to all Irving shareholders before the Banca Commerciale tender offer. The warrants, one for every four shares of Irving stock, would have a term of seven years and an exercise price of $65 per share of Irving stock. The new deal means Banca Commerciale would be offering the same amount of money for Irving shares even though the shares would be worth less to the Italian bank because of the distribution by Irving. Irving said BCI's financial adviser, Lazard Freres & Co., put the value of the warrants to shareholders at $4 to $7 per share of Irving common stock. Irving stock closed at $71.37{ per share, up 12{ cents, in New York Stock Exchange composite trading Tuesday. Bank of New York rose $1.25 per share to $36.12{. Bank of New York responded that its bid for all of Irving's stock remained superior. Owen Brady, a spokesman for Bank of New York, said BNY's financial adviser Morgan Stanley & Co. projected that if Irving stock sold for $45 a share after a merger with BCI, the warrants effectively would add no more than $1.35 per share in value to BCI's previous offer. Bank of New York, which owns a 4.9 percent stake in Irving, is offering $15 in cash and 1.575 shares of its own stock for each of Irving's common shares outstanding. The offer is valued at around $68 a share or $1.2 billion. Bank of New York has offered to sweeten its offer by slightly raising the stock portion of the bid and adding other shareholder incentives, including a special cash dividend, if Irving agreed to abandon its anti-takeover ``poison pill.'' The company also has gone to court seeking to remove the defensive mechanism, which would make an unsolicited merger prohibitively expensive. Irving steadfastly has rejected Bank of New York's takeover advances, which surfaced last September. Estimates of the value of the offers have differed widely. The Irving board said analyses by its advisers, Goldman, Sachs & Co. and J.P. Morgan & Co. Inc., said the Banca Commerciale offer was worth $74 to $79.50 a share. Robert Felise, an executive vice president at Irving, said a separate analysis by Lazard Freres valued the sweetened BCI offer at $80 or more per share. BCI's advisers valued the Bank of New York offer at $72 to $77 a share.
