Merger rumors roil Summit rank and file

The Star-Ledger, September 29th, 2000

The Star-Ledger Archive COPYRIGHT © The Star-Ledger 2000

Date: 2000/09/29 Friday Page: 031 Section: BUSINESS Edition: FINAL Size: 648 words

Merger rumors roil Summit rank and file By SAM ALI STAR-LEDGER STAFF

Summit Bancorp's stock settled down yesterday on day three of the FleetBoston Financial merger watch, but the same could not be said for nervous employees at the state's largest bank.

Both banks declined to discuss the rumors that have sent Summit's stock climbing almost 23 percent since Monday. That only heightened the water-cooler talk by employees at the Princeton-based bank.

''I understand Summit has a fiduciary responsibility to its shareholders, but they also should have an ethical duty to their employees," said one employee, who asked not to be identified.

Some employees at the bank's Princeton headquarters off Route 1 said they got memos from higher-echelon executives asking them to "please stay focused at the task at hand" and urging them "not to be distracted by the rumors."

After soaring Tuesday and Wednesday, Summit's stock rose 19 cents yesterday to close at $34.50 in New York Stock Exchange trading. FleetBoston, the nation's eighth-largest bank, also closed slightly higher, rising 25 cents to $39.25.

Summit, with a network of 500 branches and a 15.6 percent share of the New Jersey market, has been the subject of takeover speculation for years. But the prospect of a takeover seems more likely now as the bank struggles to increase its deposit base and diversify its fee-based businesses in order to broaden its revenue stream, analysts said.

Additionally, a Fleet/Summit union makes strategic sense for FleetBoston, which only commands 6 percent of the market share in New Jersey.

Snapping up Summit would automatically catapult Boston to the No. 1 position in the state with 21 percent of the deposit market share. Currently, the $180 billion-asset bank only operates 169 branches here.

And because there is so much overlap, it could cut costs substantially by consolidating operations.

One analyst, Mike Plodwick of UBS Warburg, estimates a combined Fleet/Summit could cut costs by nearly 20 percent.

It's exactly this kind of speculation that has Summit's 9,000 employees worried.

On a Yahoo message board, one woman, identified only as "empwife," wrote: "I know the responsibility of a CEO is to his Board of Directors and his stockholders. But I also know that a bank, or any company, is successful only if it has good, dedicated employees. . . . A lot of employees are going to be hurt by this merger."

One story in particular that got a lot of attention yesterday - and ultimately was dismissed by the company as false - was reports that Summit's general counsel, Richard F. Ober Jr., had been fired and was seen carting boxes to his car surrounded by two female employees who were crying.

The source of the bogus report turned out to be a Yahoo message board, according to Summit spokesman Steven Lubetkin.

However, another rumor, which could not be verified, included a report that Fleet executives had in fact descended on Summit yesterday morning to begin a lengthy due-diligence process - a fancy legal term for learning exactly what you're paying for. The process usually involves a lengthy review of legal documents and regulatory paperwork by attorneys and executive in search of hidden glitches, booby traps, problems or anything fishy that might derail a planned merger.

One employee, who asked not to be named, said a meeting yesterday was cut short because a bank attorney needed to attend to due-diligence tasks. Summit declined to comment on that statement.

Summit's board of directors, which was away at a previously planned annual retreat in eastern Pennsylvania for a few days, returned Wednesday. _____________________________________________________________________________________________ Sam Ali covers banking and per sonal finance. She can be reached at or (973) 877-4188.

PHOTO CAPTION: 1. Joseph Semrod helps Summit Bancorp as president and CEO. Semrod has been under pressure to raise the bank's languishing stock price. CREDIT: 1. VIC YEPELLO/THE STAR-LEDGER

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