NationsBank agreed to buy Florida’s Barnett Banks for $14.6 billion worth of stock on Friday to create the nation’s third-biggest bank in the industry’s largest takeover.
The acquisition of Florida’s largest bank makes NationsBank an even stronger powerhouse in the Southeast - combined with Barnett, its Florida operations alone would rank as the country’s 10th-biggest bank.
“This merger vaults us to a commanding position in the best growth markets in the United States,” said Hugh L. McColl Jr., chief executive of Charlotte, N.C.,-based NationsBank.
News of the deal sent Barnett’s stock up nearly 25 percent on the New York Stock Exchange. NationsBank stock fell moderately, making the all-stock deal worth just more than $70.80 per share to Barnett stockholders.
The biggest previous banking deal was Wells Fargo & Co.’s $14.2 billion purchase of First Interstate Bancorp. After the deal, NationsBank would rank behind Chase Manhattan and Citicorp, replacing BankAmerica as the No. 3 banking company in the country.
Banks have been buying each other in recent years in a flurry of deals aimed at making them better competitors with brokerages and insurance companies.
“This would allow NationsBank to come in and dominate in Florida,” said Geoffrey Simon, an analyst with Robert W. Baird.
The deal surprised Florida officials, who immediately launched an investigation to make sure there weren’t any anti-trust violations. The attorney general’s office said Nationsbank and Barnett executives should receive subpoenas by Tuesday for all documents related to the takeover.
“This combination creates a banking behemoth,” said Pete Antonacci, deputy attorney general. “In some communities, that simply may not be acceptable from a competition point of view. We want to make sure there isn’t any depositor road-kill out there.”
Bank mergers typically mean a loss of jobs and branch closings. Scott Scredon, a NationsBank spokesman, said it was too soon to say whether or how many employees or branches may be affected, but the company said it expects to realize $915 million in annual savings from the deal by 1999.
The merger, which faces government review, is expected to be completed early next year, the companies said.
Speculation that Barnett was shopping itself around lifted the company’s stock Thursday in trading that was more than triple its average volume. On Friday, Barnett rose $13.06 per share to $67.87-1/2. NationsBank fell $3.69 to $59.62-1/2 on the NYSE.
Jacksonville, Fla.-based Barnett has maintained for years it wanted to remain independent. Its strength in Florida has made it an attractive merger candidate for years.
“It’s the number one bank in the fastest-growing market in the country, so we find that extremely appealing. It will allow us to grow our bank significantly,” Scredon said.
Barnett, with $44 billion in assets, has more than 600 branches in Florida and south Georgia, and about 22,000 employees. The company offers consumer lending in 41 states, but most of its business is in Florida.
NationsBank operates 2,600 branches in 16 states - mostly in the Southeast and Midwest - and the District of Columbia and has assets of $240 billion. It has 80,000 employees, including 8,000 in Florida.
Charles E. Rice, the chairman of Barnett, would become chairman of NationsBank after the retirement of Andy Craig at the 1998 annual meeting, the companies said.
xxxx Largest banks Here are the largest U.S. banks, based on assets and including banking combinations that have been announced but not yet completed: 1. Chase Manhattan Corp., New York, $352.03 billion. 2. Citicorp, New York, $304.29 billion. 3. NationsBank Corp., Charlotte, N.C., $284.37 billion, based on merger with Barnett Banks Inc. announced Friday. 4. BankAmerica Corp., San Francisco, $258.36 billion. 5. J.P. Morgan & Co. Inc., New York, $250.49 billion.
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