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URGENT Security Pacific, Rainier Bancorp To Merge In $1.15 Billion Stock Swap

February 24, 1987 GMT

SEATTLE (AP) _ Security Pacific Corp. and Rainier Bancorporation said today they would merge in a stock swap valued at about $1.15 billion, creating a $72 billion bank holding company in one of the biggest U.S. bank mergers ever.

The announcement of the merger comes a day after Rainier disclosed it had received separate merger offers from two undisclosed out-of-state banking companies.

Los Angeles-based Security Pacific, the nation’s sixth-largest bank holding company, was considered a likely suitor.

Under the merger agreement, Security Pacific would swap 1.3 shares of its common stock for each of the roughly 20.9 million outstanding Rainier shares, plus Rainier shares to be issued in the company’s pending acquisition of United Bank, of Tacoma, Wash.

Based on Monday’s $40.25 a share closing price for Security Pacific stock, the deal would be worth about $1.15 billion, the banks stated.

Rainier also granted Security Pacific an option, under certain conditions, to purchase at $45 per share a number of newly issued shares of Rainier common stock that will represent 24.9 percent of the total Rainier shares then outstanding.

″This merger combines two of the strongest, most profitable, most highly regarded banking organizations on the West Coast. It produces the premier bank in the region, with major strengths throughout the Pacific Rim,″ Security Pacific Chairman Richard J. Flamson III and Rainier Chairman G. Robert Truex Jr. said in a joint statement.

The agreement has been approved by Rainier’s board of directors, and Security Pacific’s senior management will recommend approval at that company’s board meeting on Wednesday. The deal is subject to approval from government regulators and shareholders of both corporations.

Rainier stock had jumped $5.25 a share to close at $47.25 Monday in national over-the-counter trading, after rising $3.25 a share Friday on merger speculation.

The largest U.S. bank merger was Chemical New York Corp.’s $1.2 billion purchase of Texas Commerce Bancshares Inc., of Houston, last year.

Rainier said it would retain its name, management and employees after the merger.

Analysts widely had speculated that Security Pacific and Minneapolis-based First Bank System Inc. had approached Rainier about a possible merger.

Both banking companies have purchased failing Washington banks in the past year, which permits each to acquire healthy state banks before the July 1 effective date of Washington’s interstate banking law.

Rainier Bancorporation, parent of Rainier National Bank, has assets of $9.2 billion. The company operates three commercial banks, a savings bank and a mortgage company.

Rainier’s various holdings operate from 221 locations in eight Western states and 20 international offices in nine countries on the Pacific Rim. Rainier has about 6,000 shareholders and about 5,500 employees.

Security Pacific had about $62.6 billion in assets and First Bank $28 billion as of year-end 1986.

A combination of the two would create the nation’s fifth-largest bank holding company.