First Interstate rejects new Wells Fargo bid Firm supports First Bank's offer


LOS ANGELES -- First Interstate Bancorp yesterday rejected Wells Fargo & Co.'s sweetened takeover bid, reiterating its support for First Bank System Inc.'s $10.44 billion offer and setting the stage for a proxy fight.

The move marks a hardening of battle lines in U.S. banking's biggest hostile takeover fight ever, which only First Interstate's shareholders can settle, analysts said.

"This thing is probably going to be down and dirty to the end, and it's going to be a decision by major shareholders which way they're going to go," said analyst Anthony Lombardi of Dean Witter Reynolds Inc.

Last month, Wells Fargo offered 0.625 of a share for each First Interstate share, and last Monday the San Francisco-based company raised that to two-thirds of a share. The latest bid is worth $141.17 a share, or $10.69 billion.

Before Wells Fargo can put its offer to a vote of First Interstate shareholders, it must remove the "poison pill" anti-takeover measure that lets First Interstate's board block a hostile bid. It's attacking the pill through a lawsuit and by trying to convince First Interstate shareholders to replace the existing board with a Wells Fargo slate.

If it succeeds, Wells Fargo can ask First Interstate stockholders to tender their shares.

Meanwhile, First Interstate plans to put First Bank's offer to a shareholder vote. No date has been announced, but First Bank last week said it might take place in March.

Minneapolis-based First Bank plans to pay 2.6 shares for each First Interstate share. That's equal to $137.80 at Friday's closing price, or $10.44 billion.

Though the Wells Fargo bid is higher, First Bank and First Interstate say it's less valuable to First Interstate shareholders in the long run.

In a letter yesterday to his company's stockholders, First Interstate Chairman and Chief Executive William Siart said a combined Wells Fargo-First Interstate would have a weaker revenue base and less geographical diversity than a First Bank-First Interstate combination. Calling a merger with First Bank "a winning combination," Mr. Siart told Wells Fargo to go away.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.