Trading in Cullen-Frost Halted amid Rumors
Fraust, Bart, American Banker
NEW YORK -- Over-the-counter trading in shares of Cullen-Frost Bankers Inc. of San Antonio, Tex., was halted amid rumors that the company's planned merger with First City Bancorp. of Texas Inc., Houston, was about to be terminated.
"The stock prices indicate that the deal is dead," said Sandra Flannigan, a Houston-based bank analyst for Paine Webber Inc.
On the New York Stock Exchange at midday Thursday, First City was trading at $16.50, up from $15.75 at the close on Wednesday. Before the National Association of Securities Dealers halted over-the-counter trading in Cullen-Frost, the company was trading at $22.25, down $2.25 from the close on Wednesday. When a merger is canceled, often the stock price of the buyer rises while that of the seller drops.
The First City-Cullen Frost deal was first announced in July 1983. At that time, the deal had a total value of $288 million. In January, the accord was extended until Jan. 31 to give the Federal Reserve Board additional time to consider the application. The transaction, which was approved by First City and Cullen-Frost shareholders in May 1984, has not been ruled on by the Federal Reserve.
Under the accord, each of the 7.2 million outstanding shares of Cullen-Frost would be exchanged for either $38 in cash or $28 worth of common stock.
"There seems to be a hesitancy on the part of the Fed to step up to the plate and make a decision on the application," said Ms. Flannigan. The Paine Webber analyst added that while the companies have shown some improvement from 1983 results, there may still be regulatory concern about the merger because of problems in the energy and real estate industries. …