Sidhu reportedly has a $30 million agreement to buy troubled Sanford, Fla.-based Federal Trust Corp., a tiny bank holding company, which has 11 branches and total assets of $639.8 million as of June 30. The 20-year-old bank has been struggling due to unpaid mortgages and has posted losses for the past 18 months. Prompted by losses, the Office of Thrift Supervision recently ordered the firm to comply with federal banking regulations by raising $35 million by Sept. 30.
The deal is the first of note for Sidhu and his nascent investment firm Sidhu Advisers, which he founded last year. The firm also is sponsoring a SPAC, Sidhu Special Purpose Capital Corp., which filed in March with regulators for an IPO to raise up to $150 million. However, it hasn't begun trading yet as its original lead underwriter, Bear Stearns Cos., no longer exists. The SPAC recently tapped the Maxim Group LLC as the bookrunner for the offering.
Deal Zone seems to suggest that Sidhu could work his dealmaking magic again and turn Federal Trust into another massive regional bank much like he did with Sovereign. During his 17-year tenure at the Redding, Pa.-based firm, he turned the $400 million savings bank into an $89 billion institution with 800 branches running from Boston to Baltimore. However, Deal Zone forgets that his dealmaking ultimately led to his ouster in 2006. Sidhu sold off a 19.9% stake in the bank to Spain's Banco Santander SA in order to fund the $3.6 billion acquisition of New York-based Independence Bank. The deal raised the ire of investors, who were led by hedge fund Relational Investors LLC.
While Relational's founder and principal Ralph Whitworth was unable to stop the 2005 Banco Santander deal, he succeeded in his efforts to join Sovereign's board, where he campaigned for the ouster of Sidhu. It's rather ironic that the deal that undid Sidhu's career was named Independence. - Matthew Wurtzel
See story from Deal Zone
See story from BizJournals.com
See latest SPAC filing from SEC Edgar
See Dealscape: Sovereign's Independence day
It seems a little premature of Deal Zone to declare ousted Sovereign Bancorp CEO Jay Sidhu "the comeback kid," but he certainly seems to be building a new foundation for a return. 
