What happened to First Fidelity Bancorp?

The announcement Wednesday that PNC Bank Corp. won the bidding for Chemical Banking Corp.'s 84 New Jersey branches left many experts scratching their heads.

The perceived front-runner since Chemical Banking Corp. announced the sale in December, First Fidelity did not make the final round of bids, investment banking sources said.

Instead, CoreStates Financial Corp., PNC, and Midlantic Corp. were the finalists.

Fidelity's absence was especially puzzling since its preliminary bid in early January easily topped $550 million, according to informed sources, and PNC won with a $504 million offer.

One theory held that First Fidelity itself could be up for sale, as has been rumored for months, with NationsBank Corp. mentioned in local press reports as a possible buyer. By going though with the acquisition of Chemical branches, First Fidelity would have raised its takeover price.

An investment banker close to the bidding speculated that First Fidelity decided it could not afford the purchase. The Lawrenceville, N.J. based- bank, under chief executive Anthony P. Terracciano, has been an active acquirer for much of the last four years, and a high level of goodwill on it books may hinder more acquisitions, the investment banker reasoned. But a source close to the bank denied that.

Chemical's insistence on closing the deal by yearend also could have been a factor. Dark-horse victor PNC pointed out that its bid was helped by the lack of antitrust concerns over an acquisition by an out-of-state company.

A purchase by First Fidelity - or by finalist Midlantic Corp. - almost certainly would have required time-consuming antitrust examinations and divestitures.

In addition, First Fidelity and its investment adviser, Goldman, Sachs & Co., were rumored to be disenchanted with some of Chemical's assets, particularly the indirect auto loans.

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