Merger rumors push Crestar stock higher

December 04, 1992|By Bloomberg Business News

RICHMOND, Va. -- Crestar Financial Corp. stock was up more than 10 percent yesterday as rumors spread that Wachovia Corp. was prepared to make a bid for the Virginia-based bank.

Crestar was up $3.50, to $37.75, during the day before closing up 37.5 cents a share at $34.625. Nearly 1.3 million shares changed hands, compared with its three-month daily average of 158,000 shares.

Both companies declined to comment, although traders, analysts and arbitrageurs say there was speculation that Wachovia was poised to offer Crestar between $45 and $50 per share, as much as $1.65 billion.

"No question Virginia is a hot spot, and the southern superregionals are homing in," said Sam Bebee, an analyst with Robert W. Baird & Co. "Wachovia buying Crestar would be a logical fit for both banks."

James Weber, an analyst with Johnson Lemon, also said a Wachovia-Crestar merger makes sense.

"Wachovia has made no secret of its intention to enter the Virginia market," Mr. Weber said. "And, though Crestar wants to remain independent, it would have to entertain an offer between $45 and $50 a share from Wachovia in the best interest of its shareholders.

Crestar, with 266 branches in Virginia, Maryland and Washington, has a book value of about $24.75 per share. Crestar Bank MD of Maryland had 23 branches in the state, with $734.7 million in assets at the end of September.

Last December, Wachovia bought South Carolina National Corp. a stock swap valued at $848 million.

"Looks like it's time for another Christmas shopping spree for Wachovia," Mr. Bebee said.

Crestar, Dominion Bankshares and Signet Banking Corp. have been considered likely takeover targets for most of the year as the rapid consolidation in the banking industry spreads to Virginia's three biggest banks. In September, First Union Corp. announced it would buy Roanoke-based Dominion Bankshares in $852 million stock swap.

Wachovia, based in Winston-Salem, N.C., has a market capitalization of nearly $6 billion.

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