Wells Fargo Challenges First Interstate Bancorp's Merger Decision with First Bank System Inc.

Wells Fargo & Co., a leading financial services company, has expressed its disagreement with First Interstate Bancorp's decision to merge with First Bank System Inc. Wells Fargo believes that this merger does not serve the best interests of First Interstate's shareholders, citing a more attractive offer from the company. The proposed merger between Wells Fargo and First Interstate would have provided a premium to market and the potential for an additional $30 per share based on expense cuts.

Key Takeaways:

• Wells Fargo offered a premium to market and the potential for an additional $30 per share based on expense cuts.
• The initial market reaction to the proposed merger caused Wells Fargo stock to close above $230 per share, implying a value of approximately $144 per share for First Interstate based on the 0.625 exchange ratio.
• Wells Fargo proposed to increase the exchange ratio to 0.65, which would have further increased the value of First Interstate shares to about $150 per share.
• The proposed merger would have resulted in an increased size of the offer by roughly $450 million.
• Wells Fargo believes that an actual merger announcement would have resulted in a more positive response from First Interstate's shareholders.
• The company facilitated discussions between its chairman, Paul Hazen, and First Interstate's representative, Mr. Siart.

Statistics:

• Wells Fargo stock price closed above $230 per share, implying a value of approximately $144 per share for First Interstate based on the 0.625 exchange ratio.
• The potential value of First Interstate shares based on the revised exchange ratio of 0.65 is approximately $150 per share.
• The size of the offer would have increased by roughly $450 million based on the revised exchange ratio.

Sources:

• "Wells Fargo & Co. Challenges First Interstate Bancorp's Merger Decision" (Business Wire, dated Nov. 6, 1995)
• Kim Kellogg at Wells Fargo & Co., (415) 396-3606