Union Planters Corp. announced Friday the biggest acquisition in its history, saying it had signed a definitive agreement to acquire Grenada Sunburst System Corp. of Mississippi.

Union Planters said it would pay $361 million in stock for Grenada Sunburst, the thirdlargest Mississippi-based banking company, with assets of $2.5 billion and 127 offices in Mississippi and Louisiana.

The price, based on Union Planters' Thursday close of $26.75 a share, represents two times Grenada Sunburst's book value and 14 times its trailing 12-month earnings.

Union Planters' stock fell Friday $1.75, to $25. Grenada Sunburst soared $6.25, to $32.50.

Slow Growth Noted

Analysts were surprised that Union Planters, which is based in Memphis and has $6.7 billion of assets, had agreed to pay such a premium for a bank in Mississippi, where economic growth lags behind that of most other states in the region.

"It demonstrates that a Mississippi bank can command a healthy acquisition multiple," said Kathryn Bissette, with Sterne, Agee & Leach Inc. in Atlanta.

Indeed, several Mississippi bank stocks rose Friday on the news. Deposit Guaranty Corp., Jackson, the state's largest, which is considered a proxy for Mississippi bank stocks in general, rose $1.75, to $31.25.

Union Planters said it expects to close the deal by yearend, pending regulatory and shareholder approvals.

But there may be one complication: Grenada Sunburst currently has a "needs to improve" rating under the Community Reinvestment Act, which requires banks to serve all customer segments in their market.

A low rating can be a red flag to regulators, but "needs to improve" is not as bad as the lowest grade, "unsatisfactory." Union Planters, the acquirer, has a "satisfactory" rating.

Jack W. Parker, chieffinancial officer of Union Planters, declined to comment on Grenada Sunburst's community reinvestment situation. Bill Anderson, Grenada Sunburst's senior vice president for marketing, said the Mississippi bank will soon have a new examination, and added, "We fully expect to do much better this time."

Mr. Anderson also said Grenada Sunburst was approached by Union Planters and did not entertain competing bids.

Mr. Parker estimated that Union Planters' 1995 earnings per share will be diluted 8.5%, based on Wall Street consensus estimates for both Union Planters and Grenada Sunburst. But he said Union Planters hopes to compensate by slashing Grenada Sunburst's expenses by 20%, or $18 million.

Union Planters already owns two community banks in Mississippi - in Clarksdale and New Albany - with $474 million of total assets. Mr. Parker said Grenada Sunburst has 21 branches that overlap with Union Planters branches.

One side benefit of the deal is that it gives Union Planters an entree into Louisiana. Grenada Sunburst owns the fourth-largest bank in Baton Rouge, with $500 million of assets.

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