Firstar Corp.'s deal to buy St. Louis-based Mercantile Bancorp is moving forward at record speed, analysts said.
Since Firstar announced the $10.6 billion deal in April, the Milwaukee- based company has swiftly brought executives from both sides together.
Senior managers from both banking companies have participated in conference calls to discuss strategy. Lenders from each bank have visited key customers and layoffs have begun, sources said, though the companies would not reveal how many jobs would be eliminated.
"I've been amazed at how quickly they're moving," said Diana Yates, a bank analyst at A.G. Edwards & Sons Inc. in St. Louis. "That's unusual in these big bank deals."
Mercantile has laid off 50 employees in its computer operations division after the $36 billion-asset company scrapped some plans to upgrade its computer system. Firstar's computer system is expected to survive the merger. Mercantile's systems would be converted in the first quarter.
The deal, expected to close in the fourth quarter, should eliminate $169 million of Mercantile's expenses.
In an internal newsletter this month, Firstar and Mercantile said they plan to offer severance packages of four weeks to 26 weeks pay, based on seniority. Executives would receive severance equal to 1.25 times a year's salary.
But these deals would pale in comparison to the compensation package for Thomas H. Jacobsen, Mercantile's chairman and chief executive officer.
Mr. Jacobsen, who would be chairman of the combined company until the annual meeting in 2001, would get $13.5 million in cash and stock once the deal closes. During his year and a half as the new Firstar's chairman, he would receive a salary and bonus of $1.8 million and options to buy one million Firstar shares.
After he retires in 2001, Mr. Jacobsen would be paid $2.5 million each year, according to a filing Monday with the Securities and Exchange Commission.
"He got a pretty sweet deal," said Ms. Yates of A.G. Edwards, adding that Mr. Jacobsen would own about $100 million of Firstar stock once his Mercantile holdings are converted.
