Analysts are skeptical that Compass Bancshares Inc. will launch a hostile bid for Amegy Bancorp. Inc. of Houston, which reportedly shunned its offer before accepting Zions Bancorp.'s.
Amegy announced Wednesday that it had agreed to sell itself to Zions for $1.7 billion. But earlier Amegy rejected a 4% higher offer from Compass, of Birmingham, Ala., Bloomberg News reported Friday.
The Compass bid valued Amegy at $24.31 a share, Bloomberg said. Zions, of Salt Lake City, is to pay $23.32.
Analysts said Friday that Compass knows firsthand the perils of bidding wars, having fended off an attempted hostile bid by First Union Corp. (now Wachovia Corp.) a decade ago.
In late 1994, First Union made a $1.14 billion bid through Harry B. Brock Jr., a founder, former chairman, and former chief executive of Compass. The following spring, Compass defeated a nasty proxy bid by Mr. Brock to force a sale; Compass chairman and CEO D. Paul Jones Jr. convinced enough directors and investors that the company should remain independent.
On Friday a Compass spokes-man said the company would not discuss the reported bid.
Amegy's CEO, Paul B. Murphy Jr., said in a Friday phone interview that the company did have other suitors and at least one other bidder, but he would not say it was Compass. But he said it is "highly unlikely" that any company will launch a hostile bid for Amegy.
"I am certain that our process was very thorough and complete," he added. "I can assure our shareholders that their interests were the sole consideration."
Analysts say that the fact that the Zions-Amegy deal carries a $60 million breakup fee could act as a further deterrent.
"I would be shocked" to see a hostile bid, said SunTrust Robinson Humphrey analyst Jennifer Demba. "I think it would be tough for Compass to pull off a hostile takeover and move forward with ...[and acquired] bank that was intact from a customer and employee perspective."
Sandler O'Neill & Partners LP analyst Kevin Fitzsimmons said it is most likely that Compass would "move on" and continue with its current expansion strategy of opening branches.
"Why get into a bidding war when we're at the peak of some of these Texas valuations?"
Ms. Demba also said several "qualitative factors" may have led the board at the $7.6 billion-asset Amegy to accept a smaller offer from Zions, which has $31.9 billion of assets.
If Amegy's board and management team wanted to preserve some independence, she said, they may have considered Zions a better bet. Zions has a younger CEO and management team and operates in a "slightly better footprint over all" than the $28.8 billion-asset Compass, she noted. In the Zions deal, which is to close in the fourth quarter, Amegy would retain its name and management.
Mr. Fitzsimmons of Sandler said it is "hard to refute the point that Amegy had fallen on tough times."
On Wednesday's conference call, Mr. Murphy, Amegy's CEO, briefly discussed his board's rationale for choosing Zions' offer.
The board had grown more comfortable with Zions' management team, liked being able to retain the Amegy name and management, and was impressed with Zions' ability to manage margins in a flat-yield environment, he said.
"I think the board's deliberations really focused on three things: what's the best situation for our customers, for our staff, and for our shareholders," he said.
