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Bank holding companies

Wells Fargo Announces Direct Acquisition Offer to First Interstate Stockholders

Strategic Insights

— 1 min read

Wells Fargo & Co., a major financial services company, has taken a significant step in its bid to acquire First Interstate Bancorp, a leading bank holding company. On November 13, 1995, Wells Fargo publicly announced its intention to directly approach First Interstate stockholders with an exchange offer. Under this proposal, each First Interstate share tendered would be exchanged for two-thirds of a share of Wells Fargo common stock. This move comes as a direct response to First Interstate's rejection of Wells Fargo's previous offer, which was outbid by First Bank System.

Key Takeaways:

  • Wells Fargo has offered to acquire First Interstate Bancorp directly, by making an exchange offer to the company's stockholders, with each tendered First Interstate share being exchanged for two-thirds of a Wells Fargo common stock.
  • The total value of the exchange offer is approximately $10.9 billion, based on 75.7 million shares outstanding and a closing price of $143.58 per share of First Interstate common stock.
  • The proposal values First Interstate shares at $143.58 per share, compared to the $166.89 per share bid by First Bank System, which was rejected by First Interstate's board of directors.
  • Wells Fargo intends to file an application with the Federal Reserve Bank of San Francisco to approve the acquisition under the Bank Holding Company Act of 1956 and anticipates no difficulty in obtaining timely approval.
  • The company will also solicit written consents from First Interstate stockholders to remove the current board of directors and replace them with Wells Fargo nominees.

Statistics:

  • Total value of the exchange offer: $10.9 billion
  • Number of First Interstate shares outstanding: 75.7 million
  • Closing price of Wells Fargo common stock on November 10: $143.58 per share
  • Closing price of First Interstate common stock on implied value: $143.58 per share
  • Proposed exchange ratio: two-thirds of a Wells Fargo common stock for each First Interstate share tendered

Sources:

  • Wells Fargo & Co. press release, November 13, 1995, "Wells Fargo to Offer to Acquire First Interstate Bancorp"
  • Business Wire, November 13, 1995, "Wells Fargo Intends to Take Offer to Acquire First Interstate Directly to Stockholders"

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