Consider questions raised by stories about Norwest/MidAmerica deal

Northwestern Financial Review, Jan 17, 1998 by Bengtson, Tom

Consider Questions Raised By Stories About Norwest/MidAmerica Deal Norwest, which has substantial holdings throughout the Upper Midwest, is reportedly about to purchase MidAmerica Banks, of St. Paul, Minn. Although the transaction has not been officially announced by either bank, prominent articles about the pending deal ran in the Twin Cities press last week. In the stories, officials from Norwest and MidAmerica declined to comment.

The stories are interesting from a number of perspectives. First, does MidAmerica Bank owner B. John Barry really want to sell? Mr. Barry may just be shopping his banks to get a sense of what they are worth.

Second, would regulators really approve such an acquisition by Norwest? MidAmerica has five banks with 23 offices in Minnesota and Wisconsin with $661.5 million in assets in an area where Norwest already has a significant presence. The Federal Reserve would subject the acquisition to the Hirschman Herfindahl Index to determine if the acquisition would give Norwest too much presence in the Twin Cities metro area. If that were the case, would Norwest want to buy MidAmerica knowing it would have to turn around and sell much of it to meet regulatory approval?

Third, how did the story get out? Norwest is good at acquisitions, and it has done a lot of them. We don't usually read about them until they are official. How did the press get out in front on this one and what influence might it have on the pending negotiations? What is MidAmerica telling its customers?