By Jeff McKinney
The Cincinnati Enquirer

A telephone call in July to Cincinnati financier Carl Lindner from the top executive at National City Corp. was the beginning of talks that led to the $2.1 billion acquisition of Cincinnati's Provident Financial Group Inc. last month by the Cleveland-based banking giant.

David Daberko, chairman and chief executive of Cleveland-based National City, called Lindner, Provident's major shareholder who will receive stock valued at about $1 billion for himself, his family and his American Financial Group Inc. Daberko wanted to arrange a meeting to discuss National City's interest in acquiring the parent of Provident Bank.

Details of the National City-Provident deal, which would create the nation's eighth-largest banking company with assets of more than $130 billion, came in a government filing Wednesday made by National City. The filing was the most descriptive to date about how the merger evolved.

On July 22, Daberko met with Lindner and his two sons, Carl H. Lindner III and S. Craig Lindner. Daberko expressed National City's interest in acquiring 100 percent of Provident, Cincinnati's second-largest banking company based on deposits.

Subsequently, several meetings and telephone calls occurred between Daberko and Lindner family members that led to the merger proposal. Craig Lindner handled the negotiations, accompanied by his father, who provided additional insight on Provident.

A confidentiality agreement was signed by National City on Nov. 4. Daberko, Carl Lindner and Craig Lindner discussed a stock-for-stock transaction with an exchange ratio of 1.04 shares of National City common stock for each share of Provident common stock.

After two more months of talks, the two sides agreed to raise the exchange ratio to 1.135 National City shares for each Provident share.

The deal also calls for Provident to pay a $84 million termination fee if the merger is not completed under certain circumstances.

The merger is expected to be completed by July, and Provident will lose its name as it's converted into National City by January.

E-mail jmckinney@enquirer.com