Shares of 1st Md. parent jump on takeover rumors

But analysts call sale of Allied improbable

February 03, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Shares of First Maryland Bancorp's parent jumped yesterday on speculation that the company is in negotiations to sell out to Germany's Deutsche Bank AG.

But industry analysts played down the possibility of a deal, saying an acquisition of Allied Irish Banks PLC is remote at best.

"I don't know where [the rumor] comes from, it is completely stupid. What else can I say?" said Ian McEwen, a Lehman Brothers analyst based in London.

Speculation about a deal between the two companies has been bubbling since Britain's the Mail on Sunday first reported it more than a week ago. Shares of Dublin-based Allied Irish rose 6.1 percent in London, closing at 18.5 euros -- equivalent to $20.53. In New York, the company's American depositary receipts rose $4.5625, to $121.625, on the New York Stock Exchange. One ADR represents six shares.

If Deutsche Bank were to make the acquisition, it would give the Frankfurt, Germany, banking company a substantial presence here. Deutsche Bank is buying Bankers Trust Corp., parent of Baltimore's BT Alex. Brown.

The addition of Allied Irish would give Deutsche Bank First Maryland's subsidiary, First National Bank of Maryland, which operates 300 branches in Maryland, Pennsylvania, Northern Virginia and the District of Columbia.

Allied is Ireland's largest banking company with $40.8 billion in assets and about 400 branches.

Officials at Allied and Deutsche Bank declined to comment. "We never comment on market speculation," a spokeswoman for Allied said.

A deal between the two companies is unlikely, analysts said, because they do not fit strategically.

Allied is a business lender and consumer banker. It has 23,000 employees worldwide in 900 offices and is largely focused in Ireland, Britain and the United States, although it does own about 60 percent of Poland's Wielkopolski Bank Kredytowy.

Deutsche Bank, on the other hand, is sprawling, and it is driven to become the world's largest financial services company. The $10.1 billion deal to acquire New York-based Bankers Trust would make it the top-ranked banking company in the world with more than $800 billion in assets and 90,000 employees.

"There is no business fit, really," said Hugh Pye, an analyst at Robert Fleming Securities in London. "There is no cost-cutting at all, there is no revenue synergy."

Pye said Allied is highly profitable and would command a "massive" premium. He said it would also be difficult to persuade Allied's directors to sell when business is going so well for the company.

"An agreed bid certainly would surprise me, but that's not to say it won't happen," Pye said.

Pub Date: 2/03/99

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