Wells' Texas Deal to Aid Bid for Cross-Border Business

that had been trying for two and a half years to make some kind of deal for itself. Wells said last week it would pay an undisclosed price for $850 million- asset Mercantile Financial Enterprises Inc. of Brownsville, Tex. After an aborted sale to another border-town banking company, Laredo National Bancshares, Mercantile began negotiating with Norwest Corp. of Minneapolis in January. In June, just before the announcement of its megadeal with Wells Fargo of San Francisco, Norwest signed a letter of intent to buy the Texas company. Norwest and Wells merged Nov. 2, and the Wells name survived. The agreement to acquire Mercantile would fill out Wells' presence in the Rio Grande Valley and make it stronger along the Mexican border. In addition to Brownsville, Wells would get nine offices in Corpus Christi on the Texas Gulf Coast. Wells Fargo is the fourth-largest banking company in Texas, with $13.8 billion of deposits. It trails units of BankAmerica Corp., Chase Manhattan Corp., and Bank One Corp. in the state. A series of small acquisitions has helped Wells beef up in the Lone Star state. Jay Freeman, a spokesman for Wells in Texas, said Mercantile will fit into a strategy of building cross-border banking businesses. Wells plans to exploit its position as a major banking company with a presence all along the Mexican border, he said. The deal, which is scheduled to close in the first quarter, would end a nearly three-year odyssey for Mercantile. Its owner, Mexican businessman Olegrio Vazquez Rana, had agreed to a deal with Laredo National in the spring of 1996. The Federal Reserve Board spent nearly two years considering approval of the merger, but last January, Laredo National owner Carlos Hank Rhon, a Mexican industrialist, withdrew his request for approval. The Fed had reportedly been investigating his business practices. Norwest's disclosure last summer that it had signed a letter of intent with Mercantile was highly unusual but was interpreted as an attempt to calm employees and customers apprehensive about Mercantile's future. "It was better to make that announcement and settle the environment for the companies," said Charles I. Miller, managing director of Alex Sheshunoff & Company Investment Banking. Mr. Miller, the investment banker for Mercantile, said the company feared further negative publicity could have disrupted its business as the failed merger with Laredo National had done.