On the afternoon of April 12, having reached a $30 billion merger agreement, executives of Banc One Corp. and First Chicago NBD Corp. booked a conference room for the next day at the Waldorf-Astoria in New York to announce the deal.
They quickly learned that NationsBank Corp. and BankAmerica Corp. had also booked space at the same hotel. They had their own deal to announce, a $60 billion blockbuster that would create the first coast-to-coast branch banking network.
Now it can be told that First Chicago chairman Verne G. Istock, afraid of his thunder being stolen, called The Wall Street Journal to break the news about the new Bank One Corp.
"Verne didn't want to do it," said a person who was in the meeting room. "But he also didn't want his deal upstaged completely. He wanted to be on the front page just like (NationsBank chief executive officer) Hugh McColl."
"That's true; it's how it happened," Bank One spokesman Tom Kelly now confirms.
Such was 1998, a year when a $30 billion merger deal competed for media attention with one double the size on the very same day.
The merger mania was by no means confined to the biggest banks. Companies such as Gold Banc Corp. of Leawood, Kan., and National City Bancshares of Evansville, Ind., snapped up community banks like there was no tomorrow.
Investment bankers feasted. Even though they missed out on advisory fees in the record-setting Citigroup merger, which was completed without them, through Dec. 28 the firms had collected $900 million in advisory fees, according to Securities Data Co. That more than doubled 1997's record of $411 million.
On the flip side, SunTrust Banks Inc. of Atlanta infuriated many of its longtime shareholders with the July 20 announcement of its agreement to acquire Crestar Financial Corp. of Richmond, Va., for $9.5 billion. SunTrust had not done a deal in 12 years, and shareholders disagreed with management's thinking that the move was worth diluting the company's legendary stake in Coca-Cola Co. SunTrust's stock price plunged.
Shortly after the SunTrust-Crestar play, the stock market storm hit, overwhelming any desires CEOs had to buy up rivals. The stock tumbles of August and September made it impossible to keep setting generous prices.
It was tough to persuade shareholders to accept dilution of their stock if it was worth 30% less than a month earlier. First Chicago's merger with Banc One was valued at only $18.9 billion when it closed in October; the BankAmerica-NationsBank price slipped to $42.8 billion.
As the year went on, year-2000 conversion issues came to the fore. And the departure of former BankAmerica chief executive officer David A. Coulter, leaving Hugh McColl and his former NationsBank troops firmly in charge, retaught the old lesson that when it comes to mergers of equals, some are more equal than others.
By yearend the merger party had cooled way down. But stock values have revived, and so may the dreams of acquisitive executives. After all, cutting deals has become a favorite way for CEOs to get into the newspapers.
