Fleet Financial Group just can't seem to shake the takeover rumors.
Merger-minded investors traded the Boston banking company's stock Friday at four times the average daily volumes, spurring the share price to a 52- week high. Fleet responded quickly by taking the unusual step of issuing a statement saying it knew of no reason for all the activity.
This week the hubbub has quieted down somewhat-but not quite enough to silence speculation. Several investment bankers, who asked not to be named, pointed out that chief executive officer Terrence Murray has yet to appoint a successor.
They also noted that Fleet's largest stockholder-investment partnership Kohlberg Kravis Roberts & Co., which holds a 7.5% stake and the rights to purchase another 2.47%-is known to push for earnings gains or mergers.
All of which has Fleet executives exasperated.
"Mr. Murray is only 57 and there's no urgency to name a successor. Fleet has a very strong management team," said Jim Mahoney, Fleet's chief spokesman.
What's more, "KKR has never put pressure on the management team in any respect," Mr. Mahoney said.
Still, analysts say pressure on banks to boost performance or find a partner is unrelenting-and that Fleet's chief executive is acutely aware of this.
Mr. Murray "acknowledges this is a make-or-break year," said Michael Plodwick, analyst at Salomon Brothers. If Mr. Murray's team "can't turn it around, maybe they'll turn it over to someone else," Mr. Plodwick said.
Since Jan. 1, Fleet's once-underachieving stock has risen 24.9%, outperforming such regionals as First Chicago NBD Corp., Wells Fargo & Co., and Mellon Bank Corp. On Tuesday shares fell 62.5 cents, to $61.375.
Analysts attribute the recent rise to takeover speculation and the belief that the bank has digested Shawmut National Corp. and National Westminster PLC's American affiliate, which it bought in 1995.
The $87 billion-asset banking company is looking to sell some of its less profitable businesses, analysts say, including its home equity lending division, indirect auto lending group, and some branches.
But Fleet's stock is trading 15.6 times 1997 earnings per share, a lower multiple than similarly sized banks, Mr. Plodwick said. This leads analysts to believe another bank could buy Fleet without diluting its own stock.
First Union Corp., NationsBank Corp., and Chase Manhattan Corp. are said to be the most interested in Fleet. But investment bankers close to all parties deny negotiations are under way.
A merger with First Union would make the most sense, says Nancy Bush, associate director of research at Brown Brothers Harriman, because of Fleet's strong northeastern presence.
But it may be easier for Chase Manhattan to absorb its New England neighbor, which has operations in Chase's market.
For a nondilutive deal resulting in 20% cost savings, Chase would have to pay $78 per share, Mr. Plodwick estimated. First Union would have to pay $83 for the same result, and NationsBank would have to pay $87.
