Wall Street Gives Its Blessing to West Coast Merger

Wall Street's initial greeting for the proposed combination of BankAmerica Corp. and Security Pacific Corp. was sharply positive.

"Oh God, I think it's great for everybody," said Frank R. DeSantis, a banking industry analyst at Donaldson, Lufkin & Jenrette, New York. "I don't see how you can't get excited about it.

"The Security Pacific shareholders were staring at a longterm workout situation and now, to say the least, they have a lot more to look forward to," he said. "Meanwhile, BankAmerica shareholders are going to get a big jump in earnings power."

Stock Seen at $50 by '93

Mr. DeSantis thinks the share price of the combined company will be in the $50 range by 1993, based on the prospect that it can earn $6 to $7 a share in that year."

Analysts have generally been projecting BankAmerica's earning this year at $4.85 a share and those of Security Pacific at $2.30.

Professional stock watchers did not think the deal would be dilutive to earnings per share of BankAmerica Corp.

"My initial reaction is that the deal will not be dilutive in any sort of meaningful way," said Mark Alpert, a bank analyst at Bear, Stearns & Co., New York.

"I don't see dilution as any big factor," said Frank J. Barkocy, banking analyst at Advest Inc., Hartford, Conn. More importantly, there is a good capital base here and there are good synergistic opportunities here."

|Antidilutive from Day One'

Mr. DeSantis said he anticipated "some kind of charge that will technically be dilutive, but I think that on a normalized or operating basis the combination is going to be antidilutive from day one."

Analysts were also happy that a tight lid of secrecy was kept on the deal. Some have been annoyed that word of earlier major deals this summer leaked out.

"All that happened, as far as I know, is that a big law firm called around Friday afternoon and asked for weekend phone numbers," said one. "But they didn't say what it might be about and, these days, how would you know?"

Activity in shares of both banks was normal last week.

BankAmerica ended the week at $37.375 on slack volume of 397,400 shares, the first time in a month that less than 400,000 shares changed hands. It also closed below its high of the past month, $37.50, which it hit on July 15, the day Manufacturers Hanover and Chemical Banking Corp. announced their merger deal.

Security Pacific finished the week at $23 on fairly typical volume of 487,400 shares. At $23, it also was below its peak of the past 30 days, $24.62, which was reached on July 15.

BankAmerica's shares were up $1.625 to $39 on Monday, while Security Pacific shares rose $9 to $32. The rise for BankAmerica is a signal from the market that no major dilution of the acquirer's stock is expected. BankAmerica's biggest shareholder by far is Wellington Management Co., Boston, which runs the Vanguard group of mutual funds. Wellington owned 11.6 million shares, or 5.5%, on March 31, according to CDA Investment Technologies, Rockville, Md.

Security Pacific's largest shareholder is Sanford C. Bernstein & Co., New York, which held 7.7 million shares, or 6.3% on March 31.

No Comments Available

Neither Bernstein nor Wellington could be reached for comment Monday afternoon.

Bankers Trust New York Corp. is the second-largest shareholder in both banks, with 3.6 million BankAmerica shares and 2.2 million shares of Security Pacific.

One analyst said the deal would put a quick end to a problem that has been a damper on BankAmerica's stock.

Investors who bought major chunks of the San Francisco bank at bargain prices early in its turnaround phase, or even last year, have been reluctant to go on acquiring the stock.

PHOTO : Well-Kept Secret Sources: DB Technology Inc., Reuters

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