Star Banc to Buy Firstar in Stock Swap

Star Banc Corp. of Cincinnati agreed to acquire Firstar Corp. of Milwaukee in a stock deal valued at about $7.2 billion. The deal would form the nation’s 21st-largest bank, with assets of more than $38 billion and 720 branch locations in the Midwest and Arizona, plus trust operations in Florida. The banks estimated the merger will reduce their expenses by $174 million over two years. Star Banc Chairman and Chief Executive Jerry Grundhofer said no branch closings are planned and few layoffs are expected from the combined work force of about 14,000. Roger Fitzsimonds, chairman and chief executive of Firstar, would become chairman of the new company, to be called Firstar and based in Milwaukee. Grundhofer would become president and CEO. Firstar shareholders would receive 0.76 of a share of common stock in the combined company for each share of their common stock while Star Banc shareholders would retain one share in the combined company for each Star Banc share. News of the merger sent Firstar shares soaring for a second day, closing at $46.38, up $8.19, on the New York Stock Exchange. Star Banc shares fell 25 cents to close at $63.63, also on the NYSE.