With Charlotte, N.C.-based First Union Corp.'s acquisition of First Fidelity Bancorp, Newark, N.J., for $5.4 billion in stock, the two banks will form the nation's sixth-largest bank holding company, pending shareholder approval.
The merger, which is the biggest bank acquisition in U.S. history, will give First Union a formidable presence on the Eastern seaboard, say industry observers, and will probably be the first in a flurry of bank megadeals to follow.
With combined assets of $123.7 billion, the two banks will serve 10.5 million customers in almost 2,000 office branches in 13 states. The banks have compatible information systems and will operate under the First Union name.
After sinking about $200 million into new products in the past two years, First Union wants to expand into Northeast markets where First Fidelity has served four out of the five wealthiest areas in the nation and a bounty of middle-market companies.
"It's a very attractive deal," said Paul Sowell, regional bank analyst at S.G. Warburg & Co., New York. "First Union can take advantage of First Fidelity's delivery system, and First Fidelity is a very efficient bank."
First Fidelity is going to have to be more than efficient to handle the host of commercial and consumer products First Union will make available. The bank is looking to hook middle-market businesses with the Capital Markets Group it formed in 1994 which offers investment services including derivatives, asset securitizations and loan syndications.
Affluent customers in the region can also expect a hard sell on annuities and mutual funds, although according to First Union spokeswoman Marianna Sheridan, no specific marketing plans are in place. First Union's marketing division handles most of the bank's advertising, occasionally giving work to The William Cook Agency, Jacksonville, Fla.; First Union is evaluating what role First Fidelity's agency of record for 16 years, Adler Boschetto Peebles & Partners, New York, will play.