C&S/Sovran Swings on Market Rumors

ATLANTA - The stock of C&S/Sovran Corp. was whipsawed the past two days as rumors of a potential roadblock to a merger with NCNB Corp. swept the market before being privately denied by the two companies.

C&S/Sovran's stock regained $1.25 a share Thursday, to close at $23.50, after falling $1.50 on Wednesday. Analysts said the volatile trading was spurred by speculation from arbitragers.

Shifting Merger Prospects

"It depends on the way the wind is blowing that day," said Frank Anderson, a banking analysts with Stephens Inc., Little Rock, Ark. "The volatility in C&S/Sovran is related to the day-to-day whims of the arbitragers who are constantly reappraising the risk/return relationship in the stock."

The drop Wednesday was attributed to rumors that C&S/Sovran, based in Atlanta, had discovered problems in NCNB's southeastern loan portfolio during the due-diligence process.

The decline was exacerbated by stop-loss orders that automatically triggered the sale of C&S/Sovran shares when they fell below a specified price.

By Thursday, investors and analysts had received enough assurances from NCNB to discount the rumors.

Grueling Process Ahead

A general awareness seems to have settled over the market that any deal between C&S/Sovran and NCNB, which is based in Charlotte, N.C., will be reached only after a lengthy and complicated negotiating process.

"People are beginning to realize that this thing isn't going to happen overnight," said Henry J. Coffey Jr., with J.C. Bradford & Co., in Nashville. "But the basic issues haven't changed."

NCNB's shares fell 50 cents Thursday, to $37, after gaining 25 cents Wednesday.

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