The surprising premium First Union agreed to pay sparked a selloff in its shares, which fell $1 on the day. At First Union's closing price of $37 a share, the deal has a value of $21.45 per Dominion share. 'Virginia and Tennessee are the only sizable markets left to First Union,' said Richard Brown, head of the financial institutions group at Bankers Trust New York Corp., which advised First Union.īy terms of the agreement, each of Dominion's 38.7 million shares will be exchanged for 0.58 share of First Union. The company also has 71 branches in Tennessee, where First Union had one branch and wanted to expand. Most of its branches are in Virginia, where a growing population and diverse industry make for potentiality profitable banking. Including Meritor and Dominion First Union would have a 10% deposit share in Virginia, fourth-largest in the state, Analysts speculated that First Union would try to buy another Virginia bank to better compete in the state against rival NationsBank Corp.ĭominion has $8.9 billion in assets an 286 offices, along with sizable mortgage servicing and trust business. 'Dominion is a nice franchise, but it isn't a major market force,' said Thomas Brown, an analyst at Donaldson, Lufkin & Jenrette Securities Corp. However, analysts said they think First Union may need to make other acquisitions in the state to become a major force. Last week, First Union announced plans to buy Meritor Savings, which also has offices in Virginia. Still, analysts said the acquisition is important because Virginia is one of the only southern states left for Charlotte, N.C.

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