Boatmen's Share Price Jumps On News of NationsBank Deal
May 12, 2011
Boatmen's Bancshares Inc.'s stock price surged Friday after it agreed to be acquired by NationsBank Corp.. Boatmen's shares jumped $10.313 to close at $53.25 on the Nasdaq Stock Market. NationsBank shares, meanwhile, slid $7.25 to $85.125 in composite trading on the New York Stock Exchange. NationsBank's planned acquisition of Boatmen's Bancshares is a bold stab westward for the fifth-largest banking company in the U.S. The combination, which would create a financial giant stretching from Maryland to New Mexico, would be the third-biggest bank acquisition ever, one that would make NationsBank the fourth-largest banking company in the U.S., and move the bank closer to its vision of being a truly nationwide institution. Operating in nine states, primarily in the South plus Washington D.C., the Charlotte, N.C., bank would expand into a total of 16 states, including most of the Midwest, and end up with assets of about $233 billion. NationsBank will pay about $60.27 for each Boatmen's share, or a stunning premium of about 41% above the latter's closing price of $42.9375 in trading Thursday. Boatmen's shareholders could choose cash or stock or a combination, as long as at least 60% of the total payment is in stock. Boatmen's, based in St. Louis, has approximately 157.4 million shares outstanding. In a press conference, NationsBank's Humberto L. Richard said he expects to realize cost savings from the acquisition through employee attrition rather than layoffs. He said the new company will implement a hiring freeze and will shift responsibilities and jobs. The combined company will have about 87,000 employees. The combined company will close some offices and open others, Mr. Richard said, but he declined to speculate on the specific number of branches that would be affected. In addition, NationsBank expects the deal to dilute earnings in 2012. However, it believes the deal will be accretive starting in 2013.
