In the biggest banking deal in U.S. history, First Union Corp. said Tuesday it is buying CoreStates Financial Corp. for $16.1 billion worth of stock to form an East Coast banking powerhouse stretching from Florida to Connecticut.
The deal would increase Charlotte, N.C.-based First Union’s assets by a third and give it the largest share of retail deposits on the East Coast. But First Union would remain the nation’s sixth-largest banking company.
Philadelphia, where CoreStates is headquartered, would become the new company’s banking center and a major center for the bank’s customer-service operations.
First Union will pay 1.62 of its shares for each CoreStates share. That values CoreStates at $81.41 a share, based on Tuesday’s closing prices.
The bid values CoreStates at about 5.32 times its book, or net asset, value. Banks paid an average 2.2 times book value in acquisitions this year, according to SNL Securities.
Still, the offer is less than the $88 a share Mellon Bank Corp. bid for CoreStates last month. The company rebuffed that takeover bid. Mellon declined to comment on Tuesday’s agreement.
Elsewhere in the banking sector Tuesday, Memphis-based Union Planters Corp., seeking to enhance its presence in Kentucky and Tennesee, said it agreed to acquire Peoples First Corp. of Paducah, Ky., in a tax-free exchange of stock valued at $378 million.
Peoples First is a multibank holding company with about $1.5 billion in total assets. It has 26 banking offices in western Kentucky and three locations in Clarksville, Tenn.
Union Planters is one of the nation’s 50 largest bank organizations, with assets of $14.8 billion.
