Magazine article American Banker

Talks Began Week after CEO Said He Didn't Intend to Sell

Magazine article American Banker

Talks Began Week after CEO Said He Didn't Intend to Sell

Article excerpt

On April 22, less than a week after Firstar Corp. announced flat first- quarter results, chairman Roger F. Fitzsimonds got a call from his counterpart at Star Banc Corp. in Cincinnati, Jerry A. Grundhofer.

That contact, documented in a proxy filing last week as the beginning of the companies' merger courtship, was also less than a week after Mr. Fitzsimonds had told his annual shareholders meeting that Firstar intended to remain independent.

During the same month, Mr. Fitzsimonds reportedly told Firstar insiders the bank would "be independent into the millennium."

When the Star-Firstar deal was announced July 1, investors and employees were caught completely off guard.

Some insiders at Milwaukee-based Firstar are still angry about it. "Fitzsimonds said the company's not for sale, and within one week he's dancing with Grundhofer," said one executive.

Neither Mr. Fitzsimonds nor Mr. Grundhofer was available to comment on these reactions.

According to the filing with the Securities and Exchange Commission, neither banking company was considering any other merger partner.

Much of their negotiations took place outside the presence of their merger advisers-Credit Suisse First Boston for Star, and Merrill Lynch & Co. for Firstar.

During several weeks, as Mr. Grundhofer and Mr. Fitzsimonds discussed terms of the agreement, neither adviser "took part in negotiating key provisions," the proxy said.

Shareholders are to vote on the deal Oct. 27. The combined company, to be called Firstar and based in Milwaukee, would have $38 billion of assets and $28 billion of deposits. …

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