The $160 billion bank combination would be the 8th largest bank holding company in the US, with some $145 billion in assets under management and $50 billion in mutual fund assets.
The franchise will operate under the US Bancorp name, and also assume their Minneapolis headquarters. Firstar is headquartered in Milwaukee. The new entity will span 24 Midwestern and Western states with 2200 branches, as it brings together Firstar’s retail banking strength and US Bancorp’s Piper Jaffray investment banking and brokerage strengths.
Firstar will exchange 1.265 shares of its common stock for each share of US Bancorp common stock in a tax-free exchange agreement. The price is a 24.4% premium over US Bancorp’s closing price on September 29, and 11.7 times their estimated 2001 earnings per share.
Jerry Grundhofer, president and chief executive officer of Firstar, will continue in those positions in the combined company. His brother John “Jack’ Grundhofer, chairman, president and chief executive officer of US Bancorp, will serve as chairman of the board until his planned retirement on December 31, 2002. The board of directors will be composed of 14 members from Firstar, and 11 members from U.S. Bancorp.
The new US Bancorp will derive 19% of its revenue from wealth management and capital markets, according to a press release. Consumer financial services will account for 38%, corporate financial services for 29% and 14% from payment systems.
The transaction, already approved by the boards of directors of both companies, is subject to normal shareholder and regulatory approvals. It is expected to close in the first quarter of 2001.