Wells Fargo & Co. seems firmly in the catbird seat with its unsolicited offer for First Interstate Bancorp.
Though hostile bids can be successfully resisted, Wall Street analysts and lawyers familiar with the banking industry's takeover battles of the past decade doubt there will be a long fight this time.
"I would say the market has already voted on this deal," said veteran banking analyst George M. Salem, noting that each company's stock soared on news of the offer.
"I think First Interstate should take the terms and do the deal," said another analyst, Lawrence R. Vitale of Bear, Stearns & Co., New York.
The market reaction was different nine years ago this month, when First Interstate made a hostile bid of its own for the then struggling BankAmerica Corp.
First Interstate's offer was below BankAmerica's book value and was largely regarded by investors as an effort to acquire an old rival on the cheap. Indeed, they appeared to recognize value in BankAmerica that had previously been obscured by its problems.
Fortified by the market's response, BankAmerica launched a legal and public relations campaign and beat back the bid.
By contrast, First Interstate faces what analysts say is a "preemptive" bid by Wells Fargo - a bid that is so high that management will have a tough time persuading shareholders to turn it down.
The Los Angeles company appears to have fewer options as a result.
"First Interstate really doesn't have much place to go," said Mr. Salem, who is with Gerard Klauer Mattison & Co., New York. "I don't see comparable bidders for them, and I don't see anyone they could buy to achieve anything near the result of a deal with Wells."
First Interstate could attempt to convince its shareholders that they would be better off if the company remained independent, but that is a difficult task these days, said Howard Adler, a banking lawyer.
"Deals in banking used to be done in gentlemanly fashion or not at all, but we are in an era of much greater shareholder activism, sometimes by very large institutional investors," said Mr. Adler, a partner in the Washington firm of Gibson, Dunn & Crutcher.
Indeed, while all the legal barriers to takeovers remain, few analysts or lawyers think a company's directors, faced with a strong bid, could wage a yearlong battle, as Irving Bank Corp. did before capitulating to Bank of New York Co. in 1988.
The big reason is that bank shareholders these days are less tolerant.
A decade ago, BankAmerica's owners were loyalists awaiting the recovery of the company and its share price. First Interstate shareholders today include numerous bottom-line-oriented investors who are not likely to be swayed by sentiment or promises.
"The imperative of the transaction overrides the cultural issues of being a nice guy," said Charles Nathan, partner at Fried, Frank, Harris & Shriver. "A lot of people said this couldn't happen, but the economic pressures are driving it."
"My guess is that the Wells bid will be hard to beat," said Michael K. Diana, an analyst at Bear Stearns and a lawyer who has worked on bank mergers and acquisitions.
"Wells can achieve huge cost reductions in a deal," he said. "They could even sell First Interstate's banks outside California if they chose to do so. No one else looks capable of doing these things."
Industry regulators, once relied on to thwart unsolicited bids in banking, also offer few hints of sympathy these days.
Federal Reserve Board Governor Edward W. Kelley Jr., who heads the central bank's committee on banking supervision and regulation, was studiously noncommittal in his comments on the offer:
"From a regulatory standpoint, we simply don't take sides in these kinds of issues at all. We deal with an application when it comes forward. If there should be safety and soundness concerns within any given merger proposal, we would deal with it in the application process."