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DIME Bancorp Stage: LBOs and Special Situations Date of Investment: 2000 Web Site : http://www.dime.com
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DIME Bancorp is a national mortgage origination and servicing business and leading regional bank in the New York market with over 120 branches throughout New York City, Long Island, and northern New Jersey. When Warburg Pincus invested in DIME in July 2000, the company was the focus of a hostile tender offer by North Fork Bancorporation. DIME's management and Board believed that North Fork's bid did not adequately represent the underlying value of Dime's franchise and that there would be substantial integration risk in merging the two organizations. Warburg Pincus invested $238 million in DIME, with the proceeds from the investment earmarked to repurchase shares from public stockholders, allowing those shareholders who desired to sell their shares at an equivalent or higher price than the value of the North Fork bid. During the time of Warburg Pincus' investment, DIME appointed Tony Terracciano as its new Chairman. Warburg Pincus' investment gave DIME's management the time needed to execute its business plan. During the year following Warburg Pincus' investment, DIME's management successfully implemented profit-improvement initiatives and a large portfolio repositioning, hired highly qualified executives to fill important senior management positions, and made substantial progress in DIME's transition to a more commercial bank-like business model. The significant progress performed by management, combined with the strength of DIME's franchise, positioned DIME as the preferred platform for Washington Mutual, Inc., the largest thrift in the US and the largest originator and provider of residential mortgages. In June 2001, DIME entered into a friendly merger with Washington Mutual, at more than twice the value of North Fork's hostile bid a year earlier. The merger with Washington Mutual closed in January 2002.
