First Bank, Wells Fargo Lob Charges as Fight Heats Up
First Bank System Inc. went on the offensive Friday against Wells Fargo & Co., charging that a Wells Fargo takeover of First Interstate Bancorp would cost more than 12,000 jobs. But Wells Fargo countered by charging First Bank with violating securities rules in its bid to acquire First Interstate.
In full-page newspaper ads up and down California and in a 1 1/2-hour conference with banking analysts, Minneapolis-based First Bank said Wells Fargo’s hostile grab for First Interstate would result in more than 12,000 layoffs, as many as 10,000 in California alone--far more than in most projections.
First Bank also asserted that the Wells bid--although 2% higher in value based on Friday’s closing stock prices--would shortchange First Interstate shareholders. And First Bank charged its San Francisco-based opponent with grossly overestimating its potential cost-savings in the deal and underestimating its likely revenue losses as depositors and loan customers flee the scorched battleground.
Wells Fargo, meanwhile, on Friday said it reported First Bank to the Securities and Exchange Commission because it believes the Friday broadside violates rules governing statements that publicly traded companies may make while a merger transaction is pending. Wells also asked the SEC to investigate trading in First Bank stock following reports that First Bank has been buying its own stock lately to prop up the price and make itself look more attractive as a merger partner.
First Bank said its comments are legal and that it has broken no laws relating to stock purchases.
Friday’s sparring is part of the campaign to win over First Interstate investors in a shareholder vote that First Bank believes will take place next March.
Another development Friday promises to turn the antagonism up another notch: Wells Fargo got approval under federal antitrust laws to buy as much as 4.9% of First Interstate’s stock. Such a stake--nearly 3.8 million shares--would make Wells Fargo one of its target’s five largest shareholders.
A Wells spokeswoman declined to respond to the substance of First Bank’s claims except to say that its layoff projections for Wells “are speculative. We’ve never released any specifics.”
First Bank has said 6,000 jobs would be lost under its friendly merger offer, with the cuts spread across the banks’ combined, 21-state territory.
Analysts and money managers who oversee blocks of First Interstate shares said First Bank scored some points in its presentation Friday. However, “it’s difficult to draw any real conclusions from what one bank says about the other’s bid,” said Lawrence Vitale, analyst for Bear, Stearns & Co.
First Interstate shares closed at $135 Friday, up $1.875; Wells gained $2.375 to $211.75, and First Bank rose 75 cents to $53, all on the New York Stock Exchange. At those prices, the Wells bid would be worth $141.17 per share to First Interstate stockholders, and the First Bank bid, $137.80.