Both sides in the Zions/First Security bank merger have now officially declared the wedding is off.
Jilted First Security Corp. tore up its prenuptial agreement with Zions Bancorp Saturday, a day after Zions shareholders soundly rejected the proposed union of Utah's largest banks. First Security's board of directors voted unanimously to terminate the pending merger agreement."The steps we are taking today mark the end of a long process we have undertaken with Zions. We are disappointed about the outcome of the Zions negative vote, particularly since First Security was prepared to take positive action to complete the merger. Zions' failure to complete the transaction necessitates First Security moving on separately," Spencer F. Eccles, First Security chairman and chief executive officer, said in a prepared statement.
Zions shareholders' unsurprising vote Friday effectively ended a 10-month courtship that was at times as stormy as it was congenial. First Security's subsequent termination of the agreement killed any chance of salvaging the once-promising relationship.
Eccles had said last week after First Security shareholders voted in favor of the merger that the ball was in Zions' court. He emphasized that First Security had held up its end of the bargain.
First Security's short but speedy weekend response is significant as both banks -- and their shareholders -- will have a keen eye on their stocks when the market opens Monday.
Harris H. Simmons, Zions president and CEO, also expressed disappointment that things didn't work out.
"We continue to believe that the strategic rationale and the benefits contemplated by this merger remain valid," he said in a statement after Friday's shareholders' meeting. "We're saddened that, given the tremendous amount of work by many dedicated employees in both companies, the transaction has not received the necessary approvals."
Zions stands to lose some $100 million in the failed deal, including $75 million in the deflated value of First Security stock it owns and $25 million in attorneys and consultants fees.
First Security, which let go hundreds of employees and spent millions of dollars on pre-merger activities, continues to be a financially strong and viable company, Eccles said.
"We remain extremely optimistic concerning our future, and our board and management team are dedicated to unlocking the full value of our franchise for the benefit of our shareholders, customers, employees and communities," he said. "We are redoubling our efforts in the days and months ahead."
The transaction, initially valued at $5.9 billion when it was announced last June, plummeted to $3.9 billion after First Security reported its first quarter earnings would be down as much as 27 percent.