Magazine article American Banker

Takeover Rumors Drive Up Shares of Regions Financial

Magazine article American Banker

Takeover Rumors Drive Up Shares of Regions Financial

Article excerpt

Regions Financial Corp. stock surged in heavy volume Tuesday, as rumors continue to surface that the Birmingham, Ala.-based bank is seeking a buyer.

Shares in Regions, which also soared three weeks ago amid heavy trading, rose $2.375 to $48 on volume of 634,600 shares, the third- most-active day for the stock in the past year.

Average daily volume is less than one-sixth that level. Since mid February, the bank's price has soared 15%.

"We would not be shocked to see this franchise sell given that its earnings per share growth has been less than impressive," said Henry Coffey, a partner with J.C. Bradford & Co.

Earnings growth has been less than 8% annually the last three years, compared to a 10% to 12% average among it peers, he said.

The most common acquirer mentioned amid the current speculation is Wachovia Corp., which has long been rumored to be eyeing the $14 billion asset company.

But Mr. Coffey, noting that Regions' and Wachovia's territories do not overlap significantly, thinks a merger between the Alabama bank and Atlanta's SunTrust Banks Inc. makes more sense. The operations of Regions and SunTrust overlap significantly in Tennessee and Florida.

Regions did not return calls seeking comment.

If the Regions did sell, the price probably would be in the $53 to $56 per share range, Mr. Coffey said. That would mean a sale price between $2.4 billion and $2.6 billion.

There may be one other explanation for Tuesday's rise in Regions' share price, however. …

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