Two years ago this week, Chemical Banking Corp. and Chase Manhattan Corp. announced their merger agreement.
One year ago, it was NationsBank Corp. and Boatmen's Bancshares.
"The market" is ready for the next megadeal. It just wasn't quite visible as of Thursday.
Instead has come a proliferation of rumors, some more plausible than others, that are moving many potential target companies' stocks. On one unconfirmed report that a bid was on Barnett Banks Inc.'s table, its shares jumped $4.50 in 30 minutes Thursday. They ended at $54.8125, up $2.375.
"The market has been aswirl in all kinds of rumors," said a hedge fund manager. "I feel a deal is coming in the early fall, but I haven't been able to identify it."
NationsBank Corp. and First Union Corp. were seen as likely suitors in many of the speculative pairings, particularly with the monoline credit card lender Capital One Financial Corp. Its shares gained $1.9375 to $39.375.
Banc One Corp., NationsBank, and KeyCorp were mentioned in connection with Barnett. Cleveland-based KeyCorp was also seen as a potential acquiree, as were First Chicago NBD Corp., CoreStates Financial Corp. of Philadelphia, Summit Bancorp of New Jersey, and Wells Fargo & Co. in San Francisco.
It is a familiar late-summer pattern.
Traders and analysts have come to believe that the Labor Day weekend-or any holiday-affords bankers the time to hammer out the details of a big transaction and prepare its announcement.
Of course, the megamergers of the last two years were announced before the long weekend.
"Every bank wants to have something to announce the first week of September," said Robert L. Tortoriello, partner at Cleary, Gottlieb, Steen & Hamilton.
Then, too, the dog days can cause minds to wander.
"When there aren't many people in the office to alleviate the boredom, people come up with rumors," said Janet McCabe, analyst at Legg Mason Wood Walker Inc. Banks that are the objects of all this talk are declining comment.
Whichever of the rumors might turn out to be true, observers said a real shift is taking place in merger marketplace. The most acquisitive-minded banks are seen emerging from a pattern of buying companies that add specific lines of business-for example, brokerages-and are returning to acquisitions designed to boost market share.
"Companies like NationsBank, First Union, and BankAmerica are back in the market competing for regionals again," said Barry P. Taff, partner at Silver, Freedman & Taff, a law firm that specializes in midsize bank and thrift mergers. "They'll make deals that the market won't necessarily see as strategic, but will expand their reach."
Aside from Barnett and Capital One, NationsBank and First Union are said to be eyeing CoreStates and Summit and Union Planters Corp., which itself has been merger-minded of late.
Traders pointed to NationsBank and First Union as likely acquirers of Barnett or Capital One because of unusually heavy trading activity. On Wednesday, 3.5 million NationsBank shares changed hands, 75% more than average. Five big block trades accounted for two million of the shares. First Union stock showed similar block activity.
The companies could be buying their stock so it can be used to pay for a merger, traders said.
A NationsBank spokeswoman said "block trades are part of the normal trading activity of our stock."
Dillon Read analyst Anthony Davis said the block trades at NationsBank could be buybacks related to the Boatmen's acquisition.
"They've bought back 56 million shares of the 73 million they said they'd buy," Mr. Davis said. "This activity could be for a new deal, or it could be for an old one."
The Charlotte Observer reported Thursday that First Union and NationsBank were both interested in Capital One.
"First Union is poised for the next move," said James Accomando, a credit card industry consultant in Fairfield, Conn. But he said Capital One, in the midst of a global expansion, plans to grow on its own.
But today's prices can be hard for boards to resist.
Banc One Corp., for example, paid 5.6 times book value, or 20.2 times earnings, for monoline lender First USA Inc. That would translate to $53 to $70 a share for Capital One, Ms. McCabe said.
Banc One's deal has been received well on Wall Street and may have given a green light to banks wanting to "buy the knowledge (of the monolines) to leverage profits of an asset already on the books," Ms. McCabe said.
But Lehman Brothers credit card analyst Thomas Facciola said the rumors "are completely made up. No (investment bankers) have been hired. No one is taking a look."
The interest in Barnett would stand out in year when banks have been busy with "strategic" mergers-those that add a line of business or prevent a rival from expanding. First Union's recent acquisition of Signet Banking Corp. was such a deal, advisers say.
"Even though the Signet franchise isn't too impressive, First Union paid a big price to prevent Wachovia from moving too far into Virginia," said one adviser on bank mergers.
Barnett's No. 1 market share in Florida makes it attractive. But although its stock has performed well in a strong year for banks, Barnett is generally not perceived as a dynamic banking company.
"You've got to be a fast grower in today's market or you're static," Mr. Taff said. "Barnett's not doing anything, and NationsBank and First Union would both love to be there."
