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NatWest Acquiring First Jersey National In $820 Million Bank Merger

August 5, 1987

JERSEY CITY, N.J. (AP) _ National Westminster Bank USA and First Jersey National Corp. have agreed to merge in an $820 million cash deal, creating a $15.8 billion bank holding company, the companies said Wednesday.

First Jersey national shares, which had soared Tuesday on takeover speculation, surged further in national over-the-counter trading following the disclosure.

First Jersey National rocketed $13 higher to $77 on Wednesday, after rising $9 Tuesday before trading was halted pending an announcement.

The acquisition by NatWest, the U.S. subsidiary of Britain’s giant National Westminster Bank PLC, was the latest in a recent spate of major bank mergers. It also highlights the surge in couplings between banks in New Jersey and neighboring states before New Jersey’s interstate banking law takes effect in 1988.

Shareholders and banking regulators still must approve the deal.

Under the merger, NatWest would pay $82 cash for each of First Jersey’s 7.6 million common shares. Preferred shareholders of the Jersey City, N.J.-based bank also would have the right to receive $82 for each of their shares, bringing the total value of the deal to $820 million, the company said.

First Jersey also gave NatWest the option to purchase newly issued shares equaling 24.9 percent of the company’s common shares on a pro forma basis. Such options generally are given to discourage competing buyout offers.

The new company, which would be a subsidiary of NatWest PLC, would have 250 branches in New Jersey, New York City and the New York metropolitan area.

Officials said they expected to complete the merger shortly after Jan. 1, when New Jersey’s interstate banking law would allow mergers with New York banks.

A number of major regional banks have been merging to form ″super- regionals’ ′ to compete more effectively with the New York money center banks as interstate banking barriers continue falling.

On Tuesday, Carteret Savings Bank of Morristown announced it had agreed to a buyout offer of $22.50 a share, or $320 million, from Home Group Inc. of New York.

Last week saw announcements of a $1.34 billion merger between First Fidelity Bancorporation of Newark and Fidelcor Inc. of Philadelphia, the biggest ever, and a $700 million merger of Pittsburgh’s PNC Financial Corp. and Central Bancorporation of Cincinnati.

New Jersey is considered especially desirable territory, with one of the nation’s strongest economies and access to the lucrative New York market.

NatWest’s acquisition made sense because both it and First Jersey National have strong middle-market loan businesses, dealing with customers in the $20 million to $250 million range, said Norman Jaffe of Fox-Pitt, Kelton Inc. in New York.

First Jersey’s strength as a mutual funds processor and check transfer agent also fits in well with NatWest’s growing interest in corporate trust activities, Jaffe said.

William T. Knowles, NatWest USA’s chairman and chief executive, will assume those roles with the bank holding company formed in the merger.

First Jersey chairman and chief executive Thomas J. Stanton Jr. will become vice chairman and a director of the new company and retain his current posts at First Jersey National.

Knowles said the acquisition was a first step towards making NatWest USA a superregional, and the company hoped to expand further into Connecticut, Pennsylvania and Ohio.

First Jersey was attractive because of its strong financial performance and management and its similar profile as a middle-market-oriented bank, Knowles said.

NatWest PLC, which acquired its U.S. subsidiary in 1979, has consolidated assets of about $140 billion, with 3,900 offices and 96,000 employees worldwide. It is the world’s 17th largest bank.

NatWest USA has assets of $11.4 billion; First Jersey has assets of $4.4 billion.

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