Wall Street clinches $16bn deals

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The Independent Online
JOHN WILLCOCK

Financial Correspondent

Mergers worth more than $16bn were announced on Wall Street yesterday in four separate deals, led by First Bank System's agreed $10.3bn link- up with First Interstate Bancorp to create the US's ninth largest bank.

American retail banks are currently undergoing massive nationwide rationalisation. First Interstate rejected Wells Fargo's hostile $10.1bn bid launched last month and began searching for a white knight. First Bank System of Minneapolis came in with an offer of 2.6 shares of its stock for each share of Los Angeles-based First Interstate. The two banks expect cost savings of $500m a year.

In the second biggest deal announced yesterday, International Paper agreed to purchase Federal Paper Board for $2.59bn in cash and stock. International Paper, the world's largest forest-products company, will pay $55 a share in cash or stock for each Federal Paper share. Including debt, the acquisition is valued at $3.5bn, the companies said.

Federal's bleached paperboard products, used to make drinks cartons and frozen-food boxes, will fit with International Paper's own packaging products, the companies said.

"Merging this outstanding forest products company will help us enhance our position as one of the industry's most efficient producers," said the International Paper chairman and chief executive, John A Georges.

The third of yesterday's deals involved a hostile bid for Cordis, a Miami- based maker of medical devices, from Johnson & Johnson.

Cordis yesterday agreed to accept $1.8bn in stock after Johnson & Johnson - the New Jersey-based health care products company - increased its original bid by 13 per cent.

J&J said that it had received a request for additional information from the Federal Trade Commission about the proposed combination of its neuroscience products business with Cordis's.

In the last and smallest deal, Sherwin-Williams said it agreed to buy the paints and adhesives company Pratt & Lambert United for $400m in cash.

Sherwin-Williams, of Cleveland, which makes paints under the Sherwin- Williams and Dutch Boy names, is the nation's largest producer of paints.

The company said that it was interested in gaining access to the product niches Pratt and Lambert fills. New York-based Pratt & Lambert serves dealers, mass merchandisers, and speciality markets. It bought United Coatings last year.

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