WASHINGTON -- Now that banking regulators have approved its purchase of a $3.1 billion family of mutual funds, First Union Corp. is laying the groundwork for a seamless merger, industry observers say.

The North Carolina bank's acquisition of Lieber & Co., the investment management firm for the Evergreen Funds, is expected to close by July.

A critical step in the process - obtaining the approval of fund shareholders - will get under way this week, with the mailing of proxy statements.

Some questions - such as whether the bank plans to change the prices on funds or combine some fund portfolios in the First Union and Evergreen families - could be answered in the proxies.

Keeping Mum for Now

Votes should be tallied by mid-June, according to First Union's lawyer, H. Rodgin Cohen, a law partner with Sullivan & Cromwell, New York.

For now, First Union is keeping mum about details of the merger, which boost its fund assets to $7 billion.

The silence is not particularly surprising. In acquiring a mutual fund company, First Union is setting out on a path that very few banks have trod, and it would probably prefer not to attract notice.

First Union's deal drew mild attention when it was announced last October. But when Mellon Bank Corp. followed suit with a much bigger deal for Dreyfus Corp. last December, First Union's proposal got swept up in the undertow. The Comptroller of the Currency approved the deal April 15.

Full Speed Ahead

Industry observers believe that behind the scenes, First Union is proceeding as it would with any merger, moving full speed ahead with integrating the two organizations. A key aim is to ensure uninterrupted service to customers.

"One of the rules of acquisition is that the sooner you get started on integrating, the sooner you get started on your new strategy, the better," said Edward Furash, president of Furash & Co., Washington.

First Union also has to design new sales literature describing the funds and train its staff on how to sell them, said consultant Geoff Bobroff. In addition, the bank has to consider how to merge two funds research staffs.

The bank may also be in the middle of conducting demographic studies of Evergreen shareholders to determine how best to sell them other bank products, said Joy P. Montgomery of Money Marketing Initiatives in Morristown, N.J.

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