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When First Financial Management Corp. (FFMC) announced last February its intention to buy Georgia Federal Bank from Fuqua Industries, the news sent shock waves through the investment community. The company's stock went into a tailspin, dropping from $29.75 to $27.25 in one day. Before settling down, the company's stock dropped as low as $24.75.
Through it all, Chairman Patrick Thomas calmly went about the company's business, certain that, despite extreme reaction to the news, the decision was in the best interest of his fast-growing financial-data-processing firm. "Probably no decision ostracized us more. There was substantial turnover of the stock after we made the Georgia Federal announcement. The reaction was short-term thinking," says Thomas, an adamant believer in the long view.
Thomas has been vindicated. After the initial shock subsided, and analysts and investors had time to consider the implications of the purchase, FFMC'S stock swung upward again and currently is trading around $30. The deal is set to close by month's end.
Investors' greatest fears revolve around the acquisition's size --about $245 million in cash -- and whether FFMC will know what kind of company it is, a data-processing firm or a thrift. With a dual personality, could the Atlanta-based company perform well on either front?
"Investors will have to be prepared to...