A privately held investment advisory firm revealed Tuesday that its chief executive backed out of a $55 million stock merger with Philadelphia-based CoreStates Financial Corp. weeks before the deal's closing.
George W. Connell, president and chief executive of Radnor, Pa.-based Rittenhouse Financial Services agreed to the merger in December because at that time owning stock in CoreStates made his estate more liquid, a company spokesman said.
CoreStates last week said the deal was off, but gave no clear reason about why the acquisition was canceled.
But Mr. Connell, who is in his late 50s, has discovered a better way to meet his estate-planning needs, the spokesman said. The merger was set to close at the end of the second quarter.
No Details on Alternative
The spokesman wouldn't describe the better estate planning vehicle. "I'm not at liberty to say, but he came up with an alternative method of planning."
Analysts said Mr. Connell, founder of Rittenhouse, is an entrepreneur who also probably did not like giving up his company to a bank.
"It sounds like somebody got cold feet as he got close to the alter," said John Duffy executive vice president corporate finance at Keefe, Bruyette & Woods.
Rittenhouse, a privately owned company that handles $5.8 billion in assets, manages "wrap accounts," a package of investment services for wealthy clients. Rittenhouse also manages pension funds.
Analysts don't feel the termination will disrupt CoreStates internally. But the deal could have boosted the bank's investment management division earnings, which declined $2 million last year from 1992.
Dennis Laplante, an analyst with Fox-Pitt Kelton, said that CoreState's stock has not been hurt by the news. "I think the stock will bounce back into the low 30s," he said.
Like many other analysts, Mr. Laplante is optimistic that three of CoreStates' recent acquisitions will generate a $3 increase in the bank's stock price by 1995. Analysts had been counting on the Rittenhouse deal to supply part of that boost.
The March acquisition of Germantown Savings Bank is expected to be accretive to earnings this year, as are mergers with Independence Bancorp and Constellation Bancorp of New Jersey.
CoreStates would not comment on the merger termination. A CoreStates' spokesman said the bank "will continue to try and look for opportunities to build our trust and investment management business."