Mercantile makes offer for Va. bank company

March 30, 1994|By David Conn | David Conn,Sun Staff Writer

Mercantile Bankshares Corp. yesterday announced it has agreed to pay about $42 million for a small banking company in Fredericksburg, Va.

Mercantile, the parent of the Mercantile-Safe Deposit & Trust Co., said it will buy the closely held Fredericksburg National Bancorp Inc., in a tax-free exchange of stock. Fredericksburg is the parent of the National Bank of Fredericksburg, a 129-year-old bank with $236 million in assets, seven branches and about 140 employees.

The deal, approved by both companies' boards of directors, calls for Mercantile to exchange 2.84 shares for one share of Fredericksburg. Fredericksburg, which has 788,112 shares, does not trade on public stock exchanges. At Mercantile's closing price yesterday of $18.625, down 50 cents from Monday, the deal was valued at $41.7 million.

The merger awaits the approval of regulators and Fredericksburg's stockholders. The company hopes to hold its annual shareholders meeting by the end of May, said Fredericksburg President Gregory R. Bosiack.

Mr. Bosiack explained that his board had struggled with "the classic community bank problem of trying to provide stockholder liquidity and providing a market for the stock, but they were not interested in merging the bank out of existence."

Scott & Stringfellow Inc., Fredericksburg's financial adviser, had mentioned Mercantile and its reputation for preserving local autonomy among banks it buys.

"I am pleased that under our affiliation with Mercantile, the National Bank of Fredericksburg will retain its own name, its own board of directors and its own staff," Mr. Bosiack said.

The company has more than 1,000 shareholders.The last time the stock was sold, it traded for $42 or $43 a share, according to Mr. Bosiack. At yesterday's stock market close, the Mercantile deal would value those shares at $52.90 each.

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