Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 2, 1993 TAG: 9303030383
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
BANK STOCK SWELLS
The surge in the price of First Union Corp. stock pushed the value of Monday's merger with Dominion Bankshares Corp. past the billion-dollar mark.Dominion disappeared as a corporation, although not as a bank, at the close of business Monday. The bank will carry the Dominion name until the end of this year, when the new Charlotte, N.C., owners complete consolidation of internal systems as well as more-visible signs.
The Roanoke-based company today is First Union National Bank of Virginia, a subsidiary of First Union Corp.
And First Union has become the nation's eighth-largest bank, with assets of $71 billion and 1,474 offices from Maryland to Florida.
No money exchanged hands in the deal, but Dominion shareholders will get 0.58 of a First Union share for every Dominion share they held on Monday. Anyone holding 100 Dominion shares, for instance, will get 58 units of First Union common stock.
Letters were mailed Monday to Dominion shareholders telling Perhaps as important to former Dominion shareholders, the deal should mean a return to dividend payments. Dominion last paid a dividend of 11 cents a share in March 1992. them how to convert their stock.
First Union stock closed Monday at $47.25, up $2 per share since Thursday's close on news of its successful bid for First American Metro Corp. of McLean.
That run-up means Dominion stockholders will receive a value of $27.40 1/2 for each Dominion share, based on the 0.58 exchange rate.
When the deal was announced Sept. 21, First Union stock stood at $38, with the corresponding value to Dominion shareholders of $22.04 per share.
Dominion had about 38.74 million common shares. That means First Union must issue 23.82 million shares to cover the stock swap.
It also must issue 527,000 shares of preferred stock.
The value of the deal in September was $852 million. Monday, the value of the stock swap had reached $1.087 billion.
The company that was Dominion also has changed in the interim. It has been stripped of its Tennessee branches, which were added to another unit of First Union. But the Virginia bank is to gain the First American branches, along with those of two smaller banks.
Perhaps as important to former Dominion shareholders, the deal should mean a return to dividend payments. Dominion last paid a dividend of 11 cents a share in March 1992.
First Union's most recent quarterly dividend was 35 cents a share. That represents $1.40 per share on an annual basis.
Dominion shareholders approved the acquisition at a special meeting Dec. 22 by a margin of 99 percent.
First Union also announced Monday that it will sell Dominion's 11 mortgage origination offices to Mortgage Service America Inc. of Phoenix, Ariz. The terms were not disclosed.
Most of the offices are in Northern Virginia and deal with the real estate and construction communities.
First Union said it will retain the 20 offices of Dominion Bankshares Mortgage, as well as the $7 billion mortgage-servicing portfolio. All existing Dominion mortgages will continue to be serviced by First Union in Roanoke.
\ THE SALE OF DOMINION BANK
The price of Dominion Bankshares Corp. to First Union Corp. rose sharply between its announcement last Sept. 21 and the close of the deal on Monday.\ The total value of the transaction rose 27.6 percent, from an estimated $852 million last fall to $1.09 billion on Monday.
\ That's because the price of First Union stock rose 24.3 percent in that period, from $38 per share to $47.25 per share.
\ The sale was based on Dominion shareholders receiving 0.58 of a First Union share for each share of Dominion stock. The corresponding 24.3 percent rise in Dominion stock was $22.04 to $27.40 1/2 per share.\ \ Source: First Union Corp.