After several weeks of relative stability, shares of Money Store Inc. surged 11.96% Wednesday in heavy trading, sparking conjecture that a long- rumored sale was close at hand.
The Union, N.J.-based lender closed at $27.50, up $2.9375; 3.167 million shares changed hands, more that twice the daily average.
Two prevalent rumors were that First Union Corp. would pick up the lender at $29 a share or Citicorp at $32 a share.
Other companies said to be looking at Money Store included Norwest Corp., GE Capital Corp., and Greenpoint Financial Corp.
Money Store and First Union declined to comment. None of the other rumored suitors returned phone calls by press time.
First Union's shares rose 12.5 cents, to $52.5625; Citicorp's were up $1.5625, to $134.1875; Norwest up $2.25, to $114; GE Capital Corp. up 68.75 cents, to $74.25; and Greenpoint's shares fell 25 cents, to $72.25.
Many observers remained skeptical. Indeed, one investor said the market action was probably related to a conference call Tuesday morning in which NationsBanc Montgomery Securities analyst Joe Jolson predicted that the company would eventually be sold for more than $35 a share-or $1.5 billion.
Mr. Jolson did not identify a buyer, but First Union appeared to be the favorite candidate among market watchers.
"First Union is building up a consumer finance franchise, and an acquisition of the Money Store would create tremendous synergies," said one source who declined to be identified.
Elsewhere, analyst Michael L. Mayo of Credit Suisse First Boston released a report arguing that some regional banks that are not yet seen as acquisition targets could come under increased pressure to sell due to year-2000 related problems.
Mr. Mayo contended that more stringent regulatory requirements to update computer systems to recognize the year would force more banks to consider selling.
"As part of regulators' ongoing supervisory process, it is not unusual that they will continue refinement of their existing policy," the analyst said.
"Banks which merge too close to year-2000 subject themselves to increased operating risk and increased regulatory scrutinizing. Thus, more mergers are encouraged sooner rather than later," he added.
Banks likely to see a lift in their stock include BankBoston Corp., First Chicago NBD Corp., and Hibernia Corp., Mr. Mayo said.
"These stocks are generally inexpensive and have strong fundamentals," explained Mr. Mayo. "They also have little speculation in their shares."
BankBoston stock rose 18.75 cents, to $59.0625, while First Chicago's shares remained flat at $82.25. Hibernia's shares jumped 18.75 cents, to $20.125, on a day when bank stocks rose slightly.
The Standard & Poor's bank index jumped 0.90%, while the Dow Jones industrial average rose 0.40%. The Nasdaq bank index climbed 0.84%, and the S&P 500 advanced 0.41%.