Deposit Guaranty Names Top Bidder
First American Corp. of Nashville on Monday won the bidding for Jackson, Miss.-based Deposit Guaranty Corp. with an offer worth $2.5 billion in stock that allows it to spread farther into the South.
Deposit Guaranty executives said they sought bids after receiving a hostile offer from a suitor they refused to name. Deposit Guaranty Chairman E.B. Robinson Jr. said the unsolicited bid put the bank’s board members “in a very uncomfortable position.”
The deal values Deposit Guaranty at $64.06 a share, based on First American’s closing price of $54.75 Friday.
On Monday, Deposit Guaranty stock rose $4.63 to $57 on the New York Stock Exchange, while First American fell $5.19 to $49.56 in Nasdaq trading.
The Deposit Guaranty chairman said as many as 900 jobs could be eliminated as a result of the deal, but that attrition could account for many of the losses, which would be spread among both financial institutions.
Five members of the Deposit Guaranty board will join the First American board, and First American will establish a $15-million charitable foundation to help support communities served by Deposit Guaranty. The money will be used for needy families and community projects.
First American has $10.6 billion in assets, 4,200 employees and 169 offices in Tennessee, Kentucky and Virginia. It has no overlapping branches with Deposit Guaranty, which has 171 offices in Mississippi, Arkansas and Louisiana, as well as mortgage offices in Oklahoma, Nebraska, Texas, Indiana and Iowa. Deposit Guaranty has $6.8 billion in assets and 3,500 employees.
The combined bank would rank as the nation’s 42nd-largest and the fourth-largest in the South.
The purchase was the latest in a wave of banking buyouts as industry leaders try to quickly amass larger customer bases and cut costs in order to compete more effectively.
“First American was a little bit of a surprise given that they had not shown much interest in Mississippi previously,” said banking analyst Michael Granger of Fox-Pitt, Kelton in New York.
