Magazine article American Banker

Wells StockJumps 5% as Rumor Mill Churns On

Magazine article American Banker

Wells StockJumps 5% as Rumor Mill Churns On

Article excerpt

Shares of Wells Fargo & Co. surged Friday as investors placed weekend bets on another super-size bank merger.

Though there seemed little basis for the activity, bank merger speculation at the end of the stock market's week has become a near ritual, as many recent major deals have been unveiled on Mondays.

Wells was the focus of investors last week, with its share price rising $18.75, or 5.1%, to $387.25 on Friday. The previous week Fleet Financial Group was the center of attention.

But rather than conferring with lawyers and investment bankers on Friday, four senior Wells exec-utives-chief financial officer Rodney L. Jacobs, vice chairmen Clyde W. Ostler and Paul M. Watson, and executive vice president Dudley M. Nigg-were meeting with analyst Joseph K. Morford of Van Kasper & Co., San Francisco.

"They seemed more upbeat than any time since the First Interstate merger," Mr. Morford said. "They're stepping up marketing to say Wells is back."

Wells has been rumored for weeks to be a takeover target. Because bank managements have become far better at maintaining dealmaking secrecy, market players seemed more inclined to buy on rumors.

Investors have learned there is relatively little risk in buying stock on Fridays on the outside possibility of reaping a big premium should a sale be announced Monday before the stock market opens.

"You are getting a lot more movement on Fridays in this era of consolidation," said Michael L. Mayo, bank analyst at Credit Suisse First Boston.

The extra activity has also meant that the Friday moves in a company's shares are now a less reliable sign than they once were that a deal is near. For instance, PaineWebber Group's stock shot up 17% on Feb. 27, mostly in the last five minutes of trading. But the brokerage firm has not yet sold to a bank or anyone else.

And the market missed the three biggest deals in banking history. …

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