Making its eighth deal in the Sunshine State in the last 12 months, First Union Corp. said Tuesday that its Florida subsidiary had agreed to buy Coral Gables Fedcorp for $531 million in cash.
The purchase price, described as reasonable by banking analysts, equals 1.39 times the thrift holding company's book value at Sept. 30.
Coral Gables Fedcorp is the parent of Coral Gables Federal Savings and Loan Association, a $2.5 billion-asset thrift with 34 offices in southeast and central Florida.
The deal will boost First Union's first-place Dade County market share to nearly 16%, according to Ken Thompson, president of First Union National Bank of Florida. And it will increase First Union's deposit-share ranking from third to second in two key areas of the state: Palm Beach County and metropolitan Orlando.
"The acquisition of Coral Gables Federal will strengthen our market position in seven counties throughout southeast and central Florida," said Byron E. Hodnett, chief executive officer of First Union National Bank of Florida.
The deal will also increase First Union's total Florida assets to $34 billion, Mr. Thompson said. The bank expects the acquisition to be accretive to earnings by two cents per share in 1995 and to add as much as 12 cents per share to profits next year.
"They say they are going to be able to close 27 of Coral Gables' 34 branches," said Sanford C. Bernstein & Co.'s Moshe Orenbuch. "That means cost savings of 40% from Coral Gables' $50 million expense base."
Under terms of the deal, First Union will pay Coral Gables shareholders $26.59 in cash per share. The transaction will be accounted for as a purchase and is expected to close in mid-1995, pending regulatory approval.
Anthony Davis, a banking analyst at Dean Witter Reynolds Inc., called the deal a "replication" of First Union's agreement to buy American Savings of Florida, announced Dec. 5. In that transaction, which is still pending, First Union is to pay $253 million for a $3.5 billion-asset thrift with 30 offices in the Miami area.
"It's sort of (a) cookie-cutter pattern here," Mr. Davis said. "They've been building Florida for two years or more. It's kind of hard to think of any reason not to do the deal."
Robinson-Humphrey Co. was investment banker for Coral Gables. First Union did not use an outside adviser.