Union Planters Poised to Challenge Leaders in Miami with $412M Deal

Expanding its Florida beachhead, Union Planters Corp. of Tennessee announced an agreement to pay $412 million in cash for Republic Banking Corp. of Miami.

The $1.6 billion-asset Republic would be Union Planters' fifth Florida acquisition in 14 months. It would make the Memphis-based buyer No. 3 in the hotly competitive Miami market, after BankAmerica Corp. and First Union Corp.

"This is critical to our strategy and vision of expanding our coverage in the Hispanic market here," said Adolfo Henriques, the president and chief executive officer of Union Planters Bank of Florida.

The Miami-Dade County area "is half Hispanic," he said, "and we are the only bank that attracts that market with a community-based approach."

Announced late Monday after weeks of speculation, the deal would make Union Planters No. 6 overall in Florida banking, increasing its assets in the state to $5.5 billion. Union Planters would have 27 branches in the Miami-Dade area and Broward County.

Though analysts applauded the deal because it would boost Union Planters' Florida presence, some worried that the acquisitions are coming a bit too fast. Last year the Tennessee holding company announced deals to buy 13 banks and bought branches from California Federal Bank and First Chicago NBD.

Just this month Union Planters completed integrating $7.1 billion-asset Magna Group of St. Louis into its operation. It is still working on absorbing 10 other recently acquired banks.

"The short-term concern is that Union Planters' integration risk is rising given their fast growth, particularly at this stage in the economic cycle when increasing their revenue could become increasingly difficult," said William R. Katz, an analyst with Merrill Lynch & Co.

The Republic deal, which is expected to close early in the third quarter, could delay the revenue boost that investors were expecting from the spate of acquisitions, Mr. Katz said.

Union Planters' share price dipped Tuesday, to .

The deal put Republic's value at $19.25 a share. Its stock rose Tuesday, to .

Mr. Henriques said he expects that after the Republic deal, which has been in the works for nearly a year, Union Planters will significantly slow its deal pace.

"We did this transaction because it was absolutely right for us, but outside of this one, I don't see anything that is going to divert our attention," he said.

Union Planters entered the Sunshine State in 1997 with the acquisition of $1.9 billion-asset Capital Bancorp. of Miami. Last year it added $350 million-asset TransFlorida Bank in Boca Raton, $581 million-asset Ready State Bank of Hialeah, and 24 Cal Fed branches.

Union Planters reportedly was approached by Republic because its controlling shareholder, Roberto Isaias, was facing financial problems in his native Ecuador.

Mr. Isaias-who, with his brothers, owns nearly 59% of the company - lost control last year of his troubled Filanbanco, Ecuador's second-largest bank, when it was seized by the government.

With the merger, Republic president and CEO Oscar Bustillo Jr. would become Union Planters president for Miami-Dade.

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