The heated contest for Banc One Corp.'s 52 Indiana branches is nearing a conclusion.
The field of possible buyers has been narrowed to two, sources close to the negotiations said. The branches, with $1.7 billion of deposits, could fetch a premium of 18% or higher, the sources said.
Though the names of the two leading contenders are not known, the short list consists of Union Planters Corp. of Memphis, CNB Bancshares of Evansville, Ind., Norwest Corp. of Minneapolis, and PNC Bank Corp. of Pittsburgh, sources said.
The companies, which declined to comment, presumably view such a purchase as an attractive way to make a strong market entry or expansion.
It is unclear when a sale would be announced, as any deal would hinge on approval by the Federal Reserve Board and the Justice Department. The regulators call for such divestitures, as in the case of Banc One Corp.'s $30 billion merger proposal with First Chicago NBD Corp., to prevent an unacceptable concentration of market share.
These negotiated branch sales, a secondary effect of the megamerger wave, promise to reshape the banking landscape by giving smaller competitors new or stronger footholds in key markets.
Just this week BOK Financial Corp. of Tulsa, Okla., announced plans to buy 17 branches in New Mexico from BankAmerica Corp., which is preparing to merge with NationsBank Corp. The branches, with $500 million of deposits and $167 million in loans, would be BOK's first foray-other than a loan production office-into New Mexico.
Terms were not disclosed, but analysts estimated BOK would pay $50 million to $60 million.
The acquisition, set to close in the fourth quarter, would make BOK the fifth-largest bank in New Mexico, in terms of deposits. It would be No. 4 in Albuquerque, where 15 of the branches are located.
In Indiana, the winner of the Banc One branches would become the fifth- largest depository in Indianapolis, adding about $850 million of deposits.
Ahead of it would be the combined Banc One-First Chicago, National City Corp. of Cleveland, and two thrift companies, Union Holding Co. and First Indiana.
In addition to deposits, Banc One is selling $820 million of loans, mostly credits outside of Indianapolis.
The branches attracted much interest when they first hit the auction block in June. Initial bidders included Fifth Third Bancorp, Cincinnati; First Indiana Corp., Indianapolis; Huntington Bancshares, Columbus, Ohio; and KeyCorp, Cleveland.
Old Kent Financial Corp. of Grand Rapids, Mich., and Star Banc Corp. of Cincinnati also showed interest in the Banc One branches but did not bid.
According to one source, some potential bidders stayed away because of promises Banc One and First Chicago have made to Indianapolis Mayor Stephen Goldsmith. The banks agreed to retain employees and other civic commitments in the capital city, where the bulk of the soon-to-be divested deposits are.
In exchange, Mayor Goldsmith said he would not protest the merger proposal at a public hearing the Federal Reserve plans to hold in Chicago next month.
A deal in Indiana would make sense for each of the possible finalists. Union Planters, for example, is about to enter the state by buying $735 million-asset Ambanc Corp. of Vincennes. That transaction is scheduled to close next month.
CNB Bancshares chairman James J. Giancola, meanwhile, has stated publicly that he is interested in snaring the Banc One branches.
Norwest has long wanted a bigger stake in Indiana but has expanded little outside its local base of Fort Wayne. Though it is in the midst of completing a merger with Wells Fargo & Co., the Indiana deal may be bite- size enough to do at the same time, sources said.
In the Wells merger, Norwest will be required to divest branches of its own in Arizona and Nevada.
In the New Mexico divestiture, BOK said it would keep all Bank of America's branch employees and eventually open an operations center in the state. The company expects to have 230 employees in New Mexico.
The $5.7 billion-asset BOK has been hunting for acquisitions for about two years and has been rebuffed by some sellers who did not want the company's closely held stock. Tulsa oil executive George B. Kaiser owns nearly 80% of BOK.
The Oklahoma company expanded into Arkansas in 1994 and into Texas last year. BOK has said it would consider doing deals in any state that borders Oklahoma.
