SunTrust Sneaks to the Head of the Line for Wachovia

Banking analysts expect First Union (FTU Quote) to return Monday's fusillade from SunTrust (STI Quote) in the battle for Wachovia (WB Quote). But don't expect another round to change the outcome.

Indeed, SunTrust, with its unsolicited bid, currently valued at $13.5 billion, gained a lead over First Union, which last month offered a financially inferior package for Wachovia. And while analysts don't expect First Union to quit without a fight, SunTrust's superior reputation and the queasiness of First Union shareholders to pay more likely will land Wachovia in the hands of Atlanta-based SunTrust, observers say.

Back and Forth

Putnam Lovell banks analyst Jennifer Thompson believes the bidding could get pricey, though she expects it to be short-lived. Thompson says she expects there will be "one round of counter-offers with bidders possibly throwing some cash into the pot." Thompson says if either bidder adds more stock now, "it's going to be dilutive." Her firm has no banking relationship with First Union, SunTrust or Wachovia. ...