Magazine article American Banker

Banc One's Offer Raises Red Flag; Big Premium in Team Bancshares Deal May Signal Trend

Magazine article American Banker

Banc One's Offer Raises Red Flag; Big Premium in Team Bancshares Deal May Signal Trend

Article excerpt

The big price tag on Banc One Corp.'s deal to acquire Team Bancshares has heightened fears that merger premiums are rising to levels that may threaten bank stock values.

On Monday, Banc One, based in Columbos, Ohio, signed an agreement to buy Dallas-based Team for about $782 million in stocks, a premium of 2.4 times Team's book value.

"We are getting to pride levels that have to make you wonder," said Frank W. Anderson, banking analyst at Stephens Inc., Little Rock, Ark.

A Careful Look

He thinks buyouts with premiums over 1.5 times book value need special scrutiny.

To be sure, Banc One can afford the high premium it is paying for Team Bancshares since its own stock sells in that range, analyst said.

Moreover, the move pushes the superregional's market share to a solid second place in Texas, behind that of NationsBank Corp. and into first place in both Dallas-Fort Worth and the growing region around Austin.

Shares of Banc One fell $1 in Monday's trading before finishing unchanged. It was ahead 12.5 cents at $47.375 Wednesday afternoon.

Stock Was Recommended

"When Banc One sold off on the news, I advised clients to buy on weakness because they're a unique company," Mr. Anderson said.

But the price for Team Bancshares is the latest and richest among a string of major bank deals in the past two quarters. Last fall, First of America Bank Corp., Kalamazoo, Mich., paid 2.8 times book value for Security Bancorp., Southfield, Mich.

Earlier this month, KeyCorp, Albany, N. …

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