A merger of adversaries?
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May 11, 1998: 3:15 p.m. ET
U.S. Bancorp's can-do CEO may be pondering deal with Wells Fargo rival
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NEW YORK (CNNfn) - Wall Street's fast-changing financial sector was awash Monday in speculation that the helmsmen of U.S. Bancorp and Wells Fargo may be ready to bury a decades-long rivalry and fuse their companies to create yet another huge banking franchise.
John Grundhofer, the chief executive and president of Minneapolis-based U.S. Bancorp, is said to be mulling a merger with Wells Fargo, the No. 2 California bank led by his longtime rival, Paul Hazen, according to Monday's Wall Street Journal.
Wells Fargo officials were not immediately available for comment. Wendy Raway, a spokesperson for U.S. Bancorp, said it was company policy not to comment on rumors or speculation.
The rumors whetted Wall Street's appetite and pushed Wells Fargo's (WFC) stock up 4-1/16 to 373-1/2 in afternoon trading on the New York Stock Exchange. U.S. Bancorp (USB) shares were down 2-3/16 to 119-5/16.
Such a merger, were it ever consummated, would create another banking behemoth able to harness Wells Fargo's core consumer retail and business banking and U.S. Bancorp's strength in corporate trust services. A merged company would boast total assets of more than $160 billion.
The Journal said the merger had a potential deal value of around $33 billion. It would rank as the third biggest financial merger, just ahead of BancOne and First Chicago's proposed $30 billion combination, but behind NationsBank and BankAmerica's $60 billion deal and Citicorp and Travelers' whopping $70 billion proposed marriage.
The combination would be striking in other ways as well, however, rooted in the personal rivalry between Grundhofer and Hazen. The two men started out together in the 1960s at Union Bank in Los Angeles.
Hazen tapped for top post
They later ended up together at Wells Fargo, where Hazen was ultimately tapped for the top post over Grundhofer, who moved to First Bank System, where he unleashed a slew of cost-cutting reforms that earned him the moniker "Jack The Ripper."
At Wells Fargo, meanwhile, Hazen built his bank into one of the most profitable in the country in the early 1990s. Later on, the bank ran into integration problems after its $12.3 billion buyout of First Interstate Bancorp in January. That takeover had been the subject of a raging battle with Grundhofer's U.S. Bancorp, which ultimately lost the bidding war.
More recently, Grundhofer, by industry consensus, has proven his meddle at U.S. Bancorp, which today boasts more than $70 billion in assets. The turnaround has enabled him to shed his "Ripper" image and put him on an equal, if not stronger, footing than Hazen on the checkerboard of banking success stories, analysts say.
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