The Irving Bank Corporation formally rejected the Bank of New York Company's takeover offer yesterday and, in a move to foil the bid, said it would issue options to its shareholders that would allow them to buy stock in the acquiring company at half the market price.
Irving's rejection of the bid was expected, although Bank of New York is offering $80 a share, about $30 above Irving's market price when the offer was first made last month.
In a statement, Irving said the takeover proposal was ''inadequate'' and ''undesirable.''
Irving's stock price dropped 87.5 cents a share yesterday, to $74.75, in moderate trading on the New York Stock Exchange. Bank of New York stock fell 62.5 cents, to $42.125.
Irving indicated that it expects to be taken over eventually, as consolidation continues within the banking industry. The statement said that as the trend accelerates, ''our company's value would only increase'' and that ''now would not be the time to sell the corporation.''
Although Irving previously had indicated that it would not accept the bid, a spokesman for the Bank of New York expressed disappointment at the rejection.
Irving said that Goldman, Sachs & Company, its investment adviser, had concluded that the value of Irving's stock ''greatly exceeds $80 per share.'' It cited such ''undervalued'' assets as its headquarters building at 1 Wall Street.
It also charged that the two banking companies - both among the oldest in the United States - were incompatible. It said, for example, that Irving is a major international bank and that Bank of New York has no significant experience in the international area.
Irving also said that it was ''dismayed'' by Bank of New York's ''coercive, high-pressure tactics,'' and that it was ''appalled that a board of directors of the independence and stature of Bank of New York's would permit such unseemly hostility between our two institutions.''
Appealing to Bank of New York's board to give up the takeover attempt, Irving said it is fully prepared to fight it out.
Under the anti-takeover plan announced yesterday, Irving's shareholders would receive one common share purchase right for each common share of Irving held on Oct. 19, the day the options would be issued.
Each right would entitle its holder to buy $400 market value of the acquiring company's stock for $200.