, urged by hostile bidder
, rejected Dime's board nominees by a 2-to-1 margin Friday. North Fork said the move was yet another way for Dime shareholders to demand the company accept a takeover.
North Fork, based in Melville, N.Y., persuaded shareholders to withhold their votes for five board members up for election at this year's annual meeting. The move was one of several attempts toward acquiring New York-based Dime since North Fork's initial, $1.97 billion offer in April.
"This vote should send a strong and unambiguous message to Dime's Board of Directors that Dime's shareholders want Dime to commence merger negotiations with North Fork immediately," North Fork Chairman John A. Kanas said in a statement.
analyst Kevin Timmons said, "I don't think the shareholders particularly care that much whether they sell to North Fork." Instead, Timmons said shareholders used the vote more to make a public and united statement against business-as-usual practices at Dime. "It's a pretty strong message that shareholders are looking for a different message than Dime is offering."
Last week, Dime disclosed a plan to exchange a 13% equity stake in the company for $238 million from
Warburg Pincus Equity Partners
. Since April, Dime management has repeatedly rejected North Fork's offers and pursued other financing options. "Given the level of shareholder unhappiness, that's probably going to be hard to
continue to do," Timmons said. First Albany rates North Fork a buy and has done no underwriting for the companies involved.
The stepping down of this year's board nominees, which included CEO Larry Toal, would mean a majority of Dime's board would be up for re-election no later than Dime's 2001 annual meeting, Kanas said. But the board had no alternate nominees for the slots, so the current nominees will serve in spite of the withheld votes. North Fork countered that it will commence litigation against Dime's position.
Dime will release official results of its shareholder meeting on July 28. Dime closed up 3/16, or 1%, at 16 1/6, and North Fork finished up 3/8, or 2%, at 17 3/16.