Magazine article American Banker

Chemical, Hanover Shares Lose Pizzazz after Surge

Magazine article American Banker

Chemical, Hanover Shares Lose Pizzazz after Surge

Article excerpt

Chemical, Hanover Shares Lose Pizzazz After Surge

Three weeks after plans were unwrapped for the biggest banking merger in American history, shares of Chemical Banking Corp. and Manufacturers Hanover Corp. have slipped into a midsummer torpor.

"Merging is what these two banks needed to do and what everybody told them to do. Then after they say they're doing it, nearly everybody falls asleep," Observed Mark Lynch, a bank analyst for Bear, Stearns & Co.

In a Rut

Hanover's stock was unchanged for three straight days last week at $28.50 a share. Monday afternoon, the shares were off 50 cents, to $28.

Chemical stock moved only slightly in the same period, slipping from $25.62 a share to $25.50. In Monday's session, it was off 25 cents, to $25.25.

Combined trading volume for the two issues has been light o moderate. That is a far cry from the nearly 9 million shares exchanged July 15, when the deal was announced.

The two venerable New York money-center institutions have agreed to a $2.3 billion exchange of shares that would create the nation's second-largest bank, behind Citicorp. The deal calls for Hanover shareholders to get 1.14 share of Chemical stock for each of their shares.

Market watchers offer several reasons for the malaise: naging doubts that projected savings can be achieved by the merged banks, fresh evidence of a depressed local economy, and the long time lag in completing the deal, which offers investors plenty of time to buy the stock.

Skepticism Cited

"They are at a slight discount to where we thought they would be," said Mr. …

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