BANC ONE ACQUIRES FIRST USA TO ESTABLISH CREDIT CARD GIANT.

Byline: Paul Souhrada Associated Press 

After watching AT&T, General Motors and independent credit card companies capture a growing share of the consumer credit business, Banc One Corp. made its own move Monday with a $6.75 billion acquisition of First USA Inc.

The deal would create the nation's third-largest credit card operation with a combined 32 million card holders, marrying the nation's 10th largest bank with one of the nation's fastest-growing credit card companies.

If the deal is completed, Columbus-based Banc One would trail only Citicorp and MBNA Corp. in the number of credit cards issued. First USA offers both Visa cards and MasterCards.

The combined operation would have assets of $35 billion, though Dallas-based First USA is expected to continue operating under its current name.

Officials did not expect layoffs to result from the deal.

``First USA will add a powerful new dimension to our competitive arsenal and significantly change the way Banc One can compete in the consumer financial services business,'' John B. McCoy, Banc One's chairman and chief executive, said in a statement.

He said specialized credit-card issuers have developed economies of scale over the last decade. ``First USA is well known for its low-cost structure, its marketing savvy and its cutting-edge technology.''

On Monday, McCoy said Banc One is interested in further acquisitions. ``We want to be a national banking company,'' he said.

Stock analyst Lawrence Vitale said the deal is a good one.

``They're buying growth,'' he said. ``They saw the independents run away with the business, and they're trying to catch up.''

Vitale, who covers Banc One for Bear Stearns & Co. in New York, said Banc One was showing healthy growth in its credit card business, but First USA reported even faster growth and had lower losses from delinquencies.

Banc One and First USA said they expect the all-stock deal to be completed by May 31.

Terms of the transaction call for First USA's shareholders to receive 1.1659 shares of Banc One stock for each of their own shares. That works out to $48.55 a share based on Monday's market close.

First USA shares shot up 24 percent Monday as the most active issue on the New York Stock Exchange, surging $8.87-1/2 to close at $45.62-1/2 a share. Banc One fell $3.48, or 7.7 percent, to $41.64 as the second most active issue on the NYSE.

The decline in Banc One's stock price knocked down the value of the deal, calculated at $7.3 billion when it was announced before markets opened Monday.

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Photo

Photo: Banc One Corp.'s John McCoy, left, and First USA Inc.'s John Tolleson announce the merger.

Associated Press