Shares of such megamerger partners as Citicorp and Travelers Group have dipped to such a degree that they can represent excellent buying opportunities, a leading market watcher says.
A number of the stocks have become "remarkably cheap" after their April run-up on merger announcements, said David Berry, research director at Keefe, Bruyette & Woods.
Indeed, Citicorp shares closed at $154.9375 on Friday, down from a peak of $182 on April 6, when the company announced a merger deal with Travelers Group. Travelers was at $63.125 at Friday's close, compared with $76.0625 the day of the announcement.
BankAmerica Corp. closed at $85.125 on Friday, down from $91.125 on April 13, when its merger plans with NationsBank Corp. were unveiled. NationsBank ended last week at $76.9375, below the high of $80.875 on word of the deal.
The same trends held for the partners in April's other big deal. First Chicago NBD Corp. closed at $92 on Friday. The shares had reached $96.25 on announcement of plans to team up with Banc One Corp. Banc One was at $58.1875 on Friday, down from $61.75 on April 13, the day the deal was unveiled.
Mr. Berry and other analysts said they do not expect the stocks to dramatically surge upward in coming days. They see them as promising long- term investments.
Indeed, the stocks could serve as reasonable alternatives to other bank shares that have been rising on rumblings of a deal, only to fall back when it does not materialize.
Deals will continue to be struck, Mr. Berry said, "but the things you expect may not happen immediately."
That lesson was driven home last week, when Mellon Bank Corp. shares fell after Bank of New York backed away from its unsolicited bid.
Mr. Berry said he still sees U.S. Bancorp and Wells Fargo & Co. as a possible pair, despite reported animosity between the companies' top executives.
He said he also sees Fleet Financial Group striking a deal to merge or be acquired, given the company's solid New England presence and its apparent willingness to entertain discussions.
First Union Corp., under ambitious chairman Edward Crutchfield, will also be heard from, Mr. Berry said.
He is not alone with his assessment that more deals are in the offing.
"In order to maintain a competitive advantage, the industry leaders must build on strength," said Henry C. Dickson, banking analyst at Salomon Smith Barney. "Standing still is not an option."
Friday's trading lacked the drama of any giant deals, and bank stocks fell off, along with broader markets, on a quiet session in advance of the long weekend.
The Standard & Poor's bank index dropped 0.27% and the Dow Jones industrial average was off 0.20%. The Nasdaq bank index dipped 0.74%, and the S&P 500 shed 0.37%.