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J.P. Morgan Reports Limited Interest in Traditional M&A For FirstMerit


In a report published by J.P. Morgan, FirstMerit Corporation (NASDAQ: FMER) has limited interest in traditional M&A.

J.P. Morgan reported that it recently met with FirstMerit's CEO, Paul Greig. “In the backdrop of FMER's strong financial position and rich premiums recently paid on traditional deals, we thought management did a good job of allaying investor concerns that a larger sized strategic deal was needed at this juncture for FMER and, rather, that management actually has very little interest in traditional M&A opportunities at the current time. It appears the priorities for capital deployment are organic growth, followed by FDIC deals. Management believes the company has the necessary platform in both Ohio and Illinois, which means future deals will likely be more financially motivated than strategic. Overall we walked away from our meetings with comfort that the risk of the bank pursuing a larger dilutive traditional deal is low, that the organic growth profile through 2011 is better than many peers, and that although the pace of Chicago failures has been slow, the pipeline continues to grow. We view FMER as a “growth at a reasonable price” type stock and maintain our OW rating.”

FirstMerit closed yesterday at $16.60.

Posted-In: FirstMerit J.P. MorganAnalyst Color Analyst Ratings


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