(October 2) – “FleetBoston Financial Corp. agreed to buy Summit Bancorp for $7 billion in stock, beefing up its Northeastern franchise by gaining the No. 1 market share in New Jersey,” writes Hohn Hechinger in today’s Wall Street Journal.
“The banks said Sunday that FleetBoston would exchange 1.02 of its shares for each share of Summit in a deal that values Summit at $39.78 a share. That is a 15% premium to Summit’s 4 p.m. stock price Friday and a more than 40% premium to its price before the stock surged on rumors Tuesday and reports of talks between the two banks on Wednesday.”
“The deal gives FleetBoston an affluent customer base in New Jersey, where the bank is now No. 4 in terms of deposits. Fleet can sell these clients not only bank services but also money management through its mutual funds and brokerage services through its Quick & Reilly brokerage unit.”
“The acquisition also builds on FleetBoston’s big push into the New York City area, where this spring it launched its biggest-ever advertising campaign in the region. The deal ‘gives us the metropolitan New York presence we’ve talked about,’ said Eugene McQuade, FleetBoston’s chief financial officer.”
“The banks’ overlapping New Jersey operations also mean FleetBoston Chief Executive Officer Terrence Murray, known for his cost-cutting, could shave as much as $275 million annually, or about 30%, from Summit’s expenses.”
“Mr. McQuade said the bank hasn’t determined a number of layoffs but expected the job cuts to be ‘modest.’ Summit has 8,700 employees and Fleet has 55,000, including 3,000 in New Jersey. He said the bank expects to close 15% to 20% of the combined bank’s roughly 500 branches in New Jersey.”
“At Summit, based in Princeton, N.J., Joseph Semrod, chairman, chief executive and president, and John Collins, vice chairman, will stay on at FleetBoston to help run the New Jersey operations. Two Summit executives, including Mr. Semrod and another yet to be decided, will join FleetBoston’s board, expanding it to 26 from 24.”
“FleetBoston, based in Boston, the No. 8 bank, with $180 billion in assets, is already the dominant bank in New England. It has a total of 1,200 branches in that region and in New York and New Jersey.”