CoreStates Financial Corp. has rejected a takeover bid from Mellon Bank Corp., Mellon said Thursday.

"We made an offer to CoreStates which in our opinion was attractive to both sides and it was rejected," said Mellon spokesman Steve Dishart. "We withdrew it at CoreStates' request."

The offer, said sources who claim knowledge of the situation, was for more than $17 billion, or $85 to $87 a share. It reinforced Wall Street sentiment that CoreStates must either sell out or find a way to quickly revive its underperforming stock.

As it did in 1995 when BankBoston Corp. came calling in a similar way, CoreStates responded by saying it intends to remain independent.

"After full discussion, our board of directors unanimously rejected the (Mellon) offer and reiterated its expectation that the company can create the greatest long-term value for shareholders by pursuing a course of independence," the Philadelphia banking company said in a statement.

Despite CoreStates' stand, investors and analysts liked the idea of combining Pennsylvania's two biggest banks.

"It would be a nice, complementary fit," said analyst Anthony R. Davis of SBC Warburg Dillon Read. "I can't argue with it at all."

The deal, if it ever happened, would likely bring the biggest price ever for a U.S. bank.

CoreStates' market valuation is $14.8 billion-bolstered lately by takeover speculation-and is a shade higher than Pittsburgh-based Mellon's $14.2 billion. However, Mellon's 19.6 price-earnings multiple is higher than CoreStates' 18.5.

The companies have a significant consumer banking overlap in the Philadelphia area that could yield a big payoff through branch closings. Divestitures might also be required to comply with antitrust guidelines.

Mellon and CoreStates have different wholesale and operating strengths. Mellon has stressed asset management, CoreStates item processing.

A source at Mellon said the bank took the unusual step of publicizing its spurned offer because it feared the news was about to leak to the media. "We wanted to make sure our story got out," the source said, denying that the bank intended to pressure CoreStates.

But that is how the investment community read Mellon's announcement. A source at CoreStates said the offer was rejected "a couple of weeks ago."

"Mellon wants to do a deal, and I'd say CoreStates is gone in two or three months," said an institutional shareholder in both banks who asked not to be identified.

CoreStates has consistently disappointed shareholders since its largely in-market merger with Meridian Bancorp of Reading, Pa., announced in October 1995. "They've never turned market share into growth," said Natwest Securities bank analyst Thomas D. McCandless.

Since the Meridian merger was announced, CoreStates' share price has risen 89% while the Standard & Poor's bank index has risen 99%.

This past summer, after Mr. McCandless and several other analysts downgraded CoreStates and reduced earnings estimates, the stock price rose as investors speculated that its poor performance might presage a takeover.

While CoreStates is clearly under pressure to boost shareholders' returns, investment bankers and analysts said Mellon also faces pressure to make a deal.

The Pittsburgh bank's chairman, Frank V. Cahouet, is thought to be leaving soon and there is no obvious successor. And Mellon may want to signal that it is trying to defend itself against a takeover.

"This was as much a defensive move on Mellon's part as an offensive one," said Frank J. Barkocy, the veteran bank analyst at Josephthal, Lyon & Ross Inc., New York.

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