Buying Miami's Republic Banking Corp. could bolster Barnett Banks' campaign to attract more customers in South Florida's large Hispanic community.
Jacksonville, Fla.-based Barnett, which has about $40 billion of assets, said last week that it has an agreement in principle to acquire $1.5 billion-asset Republic for an undisclosed sum.
Although officials from both companies refused to discuss the deal price, published reports put it at about $400 million, or three times Republic's book value.
Despite the high price, analysts said the deal is a good one for Barnett. "It makes tremendous sense," said R. Harold Schroeder of Keefe, Bruyette & Woods Inc. "It fits a broader strategy of acquiring niche businesses within their marketplace. Given the critical role that Miami plays in Latin America, and trade between the U.S. and Latin America, this is what they need to do."
Indeed, the lure of Republic is its long history of doing business with the Hispanic community and its ties to Latin America. Republic, founded in 1965, is owned by the Isaias family of Ecuador. But for many years it was run by a well-known Cuban-exile businessman named Luis Botifoll, who forged relationships in the large and affluent South Florida Hispanic community.
Current Republic chairman Oscar Bustillo Jr. has built on those relationships and would be a powerful agent to help Barnett.
Barnett already has a large presence in South Florida, with $4.5 billion of assets and 48 offices in Dade County. The purchase of Republic would add 25 offices and $1.3 billion of deposits.
But despite its size in South Florida, Barnett has run third in the area, behind First Union Corp. and NationsBank Corp. Buying Republic would push Barnett in front of NationsBank with about 15.5% of the South Florida deposit market. First Union has about an 18% market share.