NationsBank Agrees to Buy Bank South
NationsBank Corp., the nation’s third-largest bank and already the biggest in Georgia, said Tuesday that it has an agreement to acquire Atlanta-based Bank South for $1.6 billion in stock.
The deal, the latest in a series of mergers in the banking industry, would solidify the position of Charlotte, N.C.-based NationsBank in the robust Atlanta market and take away another of the few remaining banks that call the city home.
The proposed merger could also serve as a preemptive move by NationsBank to prevent other competitors from entering the Atlanta market by acquiring Bank South, long considered an attractive takeover target.
“It’s going to be tough to get into the Atlanta market,” said John A. Pandtle, a banking industry analyst at Robinson-Humphrey Co. in Atlanta.
Bank South, the fifth-largest bank in Georgia with assets of $7.4 billion, has 149 branches in Georgia, including 60 in-store branches at supermarkets. Its network of 267 automated teller machines is the largest in the state.
NationsBank, formed in 1990 by the merger of Charlotte-based NCNB and Atlanta-based C&S-Sovran;, has $18 billion in assets in Georgia and 189 offices. Overall, the company has $184 billion in assets and operations in nine states and Washington.
The wave of bank mergers, led most recently by the combination of Chase Manhattan Bank and Chemical Bank last week, is a response to competition from within and outside the industry. Companies such as AT&T; Corp. and General Motors Corp. now have a credit card business. Brokerages offer banking services, such as checking and credit cards, along with investments. Insurers sell retirement investments and credit unions and finances companies are taking away mortgage business.
Based on the $61.50 a share closing price of NationsBank stock on Friday, the transaction would be valued at about $1.6 billion, or $27 a share of Bank South common stock.
NationsBank’s stock fell 62.5 cents in Tuesday trading to close at $60.875 on the New York Stock Exchange. Bank South closed up $2.19 to $25.44 on the Nasdaq market.
The merger increases NationsBank’s already sizable presence as the largest bank in metropolitan Atlanta and Georgia. Georgia is the fourth fastest-growing state among the most populous states, after Florida, California and Arizona.
“Bank South is a well-positioned bank in one of the most attractive markets in the country,” NationsBank President Ken Lewis said in a statement announcing the deal.
The combined company will be able to reduce costs and operate more efficiently, he said.
Chief Financial Officer James Hance told analysts that NationsBank anticipates $170 million in annual pretax savings from the merger, two thirds of which will come from personnel savings.
The merger will result in a substantial number of branches to be closed and an undetermined number of jobs cut, Lewis said.
Though many branches will be closed, many of the jobs will be transferred to the offices that remain open because of increased business at those locations, Lewis said.
The top executives at Bank South have been offered senior positions at NationsBank, though detailed discussions about the jobs have not yet been held, Lewis said.
The acquisition, unanimously approved by the boards of both companies, provides for each share of Bank South common stock to be exchanged for 0.44 of a share of NationsBank common stock, making the purchase price about $27 a share at the time the deal was announced.
The deal is sure to raise a number of antitrust issues but none that are likely to derail the merger, said Stephen Willard, a former federal bank regulator who is a lawyer in Washington specializing in mergers.
