CoreStates Financial Corp. plans to acquire Meridian Bancorp Inc. for stock valued at $3.2 billion in a merger that would eliminate nearly 2,000 jobs and 115 bank branch offices, the companies said Tuesday.
The combined Philadelphia-based bank would be one of the top 20 in the nation, with a combined $45 billion in assets and operations in 47 counties in eastern Pennsylvania, northern Delaware and central New Jersey. The two banks hope to complete the merger by next June, if stockholders and regulators approve.
About 115 of a combined 667 branches would close after the merger, and about 10% of more than 19,000 employees would lose their jobs, the banks said.
But at a news conference Tuesday afternoon, CoreStates' chairman, Terrence A. Larsen, said that estimate is high.
Larsen would become the top executive of the expanded CoreStates operation. Samuel A. McCullough, chairman of Reading, Pa.-based Meridian, would become president and chief operating officer.
In the deal, 1.225 shares of CoreStates stock would be exchanged for each share of Meridian. The value of the swap would be about $3.2 billion, based on prices before the transaction was announced.
In response to Tuesday's announcement, CoreStates stock fell $1.50 to close at $37 a share on the New York Stock Exchange and Meridian shot up $4.0625 to close at $42.875 a share on the Nasdaq Stock Market.
Tony Davis of Dean Witter said the only disappointing aspect of the deal was the timing. He said that since only part of the savings will be realized in 1996, some future earnings estimates will be lowered.
The companies come to the merger with record third-quarter 1995 earnings. CoreStates reported net income of $133.9 million, up 28% from the third quarter of last year.
Meridian reported net income of $54.4 million, a 52% increase over the same period a year ago.
Meridian has long been viewed as a takeover candidate, but until now has opted to remain independent. Analysts said the bank was too small to compete effectively with larger banks and non-bank companies that offer services such as credit cards.
Three weeks ago, Meridian executives met to discuss a sale of the company. The board hired investment banking firm Goldman Sachs to advise the bank.
CoreStates became the last Philadelphia-based bank in 1992 after Mellon Bank of Pittsburgh bought up the remains of the Philadelphia Saving Fund Society.
Three months ago, CoreStates backed out of a deal with Bank of Boston. At the time, CoreStates said it preferred to remain independent and would begin acquiring other banks.