Wells Fargo raises offer for California rival to $10.9bn
Relaunching the most expensive hostile takeover bid in the history of American banking, Wells Fargo & Co yesterday increased its offer for its rival in the California market, First Interstate, by nearly $900m to $10.9bn.
First Interstate had rebuffed the original Wells Fargo bid, made on 13 October, and last week announced it had opted instead for a friendly merger with Minneapolis-based First Bank Systems worth $10.3bn.
Either merger would represent the most expensive takeover ever between US banks, surpassing the $10bn price tag of the proposed Chemical Bank- Chase Manhattan combination. It is the hostile nature of Wells Fargo's approach that has most suprised the industry, however, which until now has been used only to friendly acquisitions.
In a letter to the board of First Interstate yesterday, Paul Hazen, chairman of Wells Fargo, said: "Our offer is superior to First Bank Systems's and we believe it is too compelling to ignore."
Simultaneously, Wells Fargo is acting in the courts to challenge provisions in the proposed takeover by First Bank that would entail large penalties if either side decided to pull out. Mr Hazen also warned that First Interstate shareholders would be solicited to vote in favour of the revised Wells Fargo offer.
Under its revised offer, Wells Fargo, America's 17th-largest bank and number two in California, would exchange roughly two-thirds of one of its shares for each share of First Interstate stock, more than its original offer of five-eighths of a share.
If it succeeds in consuming First Interstate, Wells Fargo, with 861 branches, could close many of the overlapping branches and cut costs by an estimated $700m.
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