Barnett Banks Inc.'s pending acquisition of First Florida Banks Inc. is expected to face close scrutiny from the U.S. Justice Department.
The agency has been taking a tougher stand on antitrust enforcement recently, pressuring acquirers to divest loans and deposits in other in-market mergers.
Analysts, noting that the Barnett and First Florida franchises overlap heavily in the Tampa-St. Petersburg area, said this deal could also require divestitures to pass Justice Department muster.
Barnett, based in Jacksonville, said it does not expect to make any material divestitures of First Florida assets or deposits. "We have no indication we have an antitrust problem, and we do not believe we have an antitrust problem," said Burnett spokesman Robert Stickler.
Officials at the Justice Department could not be reached for comment.
Investors on the Alert
Analysts cite investor concern over antitrust implications as one reason why Barnett's stock price fell $3.25 a share Monday, when the deal was announced.
"There's a great deal of uncertainty surrounding this situation," said Timothy G. Rayl, banking analyst with Southeast Research Partners in Boca Raton.
Mr. Rayl said he has identified "half a dozen" counties where market share concentration could cause Barnett some antitrust problems.
Barnett, for example, would end up controlling 34% of bank deposits in populous Hillsborough County, where Tampa-based First Florida is headquartered, up from its pre-merger 19%. In more rural Highlands County, Barnett's share jumps to 63% from 55%.
The Justice Department looks beyond market-share figures and tends to analyze the particulars of each deal, said Michael Greenspan, an attorney with Thompson & Mitchell in Washington. "The Justice Department standard is so fact-intensive that you can't tell before hand what transaction the department will object to," he said.
John D. Hawke, a partner with the Arnold & Porter law firm in Washington, said the department tries to ascertain the amount of concentration in small- and medium-size business lending, which cannot be determined from published figures.
Deposit share figures alone can be misleading, said Mr. Hawke, a former general counsel to the Federal Reserve Board.
Mr. Hawke said the Justice Department also takes into account the size of competitors in a given market. A very large bank with a very small share of a particular market would still be considered a viable competitor, he added.
The Justice Department recently, forced San Francisco-based Bank-America Corp. to divest $3.4 billion in deposits and $1.7 billion in assets before approving its acquisition of Security Pacific Corp., Los Angeles.
The department also forced Society Corp., Cleveland, to unload $850 million in deposits after acquiring Ameritrust Corp., also based in Cleveland.