Thursday, November 10, 2005

A hit, revisited

Gold Banc (GLDB)), a small, and somewhat troubled, bank with customers mostly in Kansas and Missouri, is being acquired by Marshall & Ilsley (MI) for $18.5/share. The cash and stock deal will be split up as $2.78 in cash and the rest in stock.

I will be keeping the MI shares I get in exchange. MI itself is fairly valued, but has room to rise and will be a target down the road.

I am not bumping up the hit count because I had already included Gold Banc earlier, when a deal was announced to take it private. That fell through, most likely due to doubts on Gold Banc's loan portfolio. If the doubts turn out to be based on real ground-level facts, this offer from MI may prove to be on the high side.

This new offer represents a 73% premium to my average cost, of $10.7/share. The gains are a bit higher if dividends are included.

The banking sector is still extremely fragmented in the southeast and I expect a lot more activity there, mostly in Georgia, Carolinas and Florida.


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