Summarized by Mike Nielsen
New suitor wins First Security
Deseret News 10Apr00 B4
By Max Knudson: Deseret News business editor
SALT LAKE CITY, UTAH -- After failed negotiations with Zions Bancorp,
First Security announced that it will merger with Wells Fargo &Co.,
based in San Francisco. The deal took place just 10 days after talks
with Zions bank broke off. First Security is the largest bank in
Utah; Wells Fargo is the 7th largest in the country.
Spencer F. Eccles, chairman and CEO of First Security, announced that he
believed the merger to be in the best interests of its stockholders,
employees and customers because Wells Fargo holds similar values and
The merger was not unexpected, given the lengthy and problematic
negotiations with Zions, but the fact that it happened just 10 days after
talks with Zions failed suggests to some that First Security had been
discussing a merger with both suitors at the same time. Eccles and Wells
Fargo president &CEO Dick Kovacevich deny this, saying that Eccles
contacted Kovacevich after Zions' shareholders killed the merger.
Wells Fargo will buy First Security for $3.2 billion in stock, less than
the $5.9 billion originally proposed by Zions. The deal awaits shareholder
approval and must pass regulatory agency scrutiny. Wells Fargo will pay
0.355 share of its shares for each First Security share, and valued First
Security at $15.50 per share. First Security stock, which fell to $12.29 on
Friday, went up to $13.44, suggesting that market watchers approved of the
deal for First Security.
Still, some observers question the deal, noting that the Zions merger would
have left First Security stockholders in a stronger position. It also will
change the banking landscape in Utah, as it introduces powerful Wells Fargo
to the Utah scene.
If the merger is completed, Wells Fargo will hold more deposits than any
other bank in Utah, New Mexico, and Idaho. First Interstate Bank, another
bank in the area, also is owned by Wells Fargo. Its presence will be more
visible, however, as teh deal calls for replacing the First Security brand
with Wells Fargo.
Layoffs are expected to result from the merger, although Kovacevich expects
that most workers in eliminated positions will find alternative jobs within
the organization. Eccles is likely to be on Wells Fargo's board of
directors, but will not have any executive role with the new company.
The only surprise in the merger is the speed with which it happened. Eccles
declined to comment on the failed merger with Zions, saying that he would
rather look to the future than to the past.