CORRECTED-Bank of America to buy MBNA
Please read in paragraph 3, “Ted Parrish, who manages theHenssler Equity Fund…” instead of “Ted Parrish, who managesthe $1 billion Henssler Equity Fund…”
A corrected repetition follows.
NEW YORK (Reuters) – Bank of America Corp.
The transaction will double Bank of America’s card base,giving it more than 20 million new accounts and bringing thecombined company’s card balances to about $143 billion with 40million accounts.
“It’s a perfect fit,” said Ted Parrish, who manages theHenssler Equity Fund and owns MBNA and Bank of America shares.”For Bank of America, it was the only big deal left for them todo. They really couldn’t take over any more major banks.”
The transaction values MBNA at $27.50 per share, a premiumof 30.6 percent to MBNA’s closing share price of $21.05 onWednesday on the New York Stock Exchange.
MBNA shareholders will receive 0.5009 of a Bank of Americashare plus $4.125 in cash for each MBNA share.
It is second major acquisition engineered by Bank ofAmerica Chief Executive Kenneth Lewis since he took the helm in2001. In April 2004, Bank of America acquired FleetBostonFinancial Corp. for $48 billion.
Bank of America has about 10 percent of U.S. deposits, themaximum allowed.
Earlier this month, Bank of America agreed to take a 9percent stake in China Construction Bank
Bank of America, whose own card operations are highlyprofitable, said it plans to eliminate 6,000 jobs and take a$1.25 billion after-tax restructuring charge. It expectsexpense savings of $850 million by 2007. The transaction isexpected to close in the fourth quarter.
Shares of Bank of America fell 91 cents, or 1.9 percent, to$46.00 in premarket trade on the Inet electronic network, downfrom a close of $46.91 on Wednesday on the New York StockExchange. Shares of MBNA rose $5.53 to $26.60 on Inet.
Bruce Hammonds, MBNA’s chief executive, will becomepresident of Bank of America Card Services, reporting toconsumer banking chief Liam McGee.
Hammonds will remain in Wilmington, Delaware, where MBNA isbased. Bank of America is based in Charlotte, North Carolina.
Hammonds and other senior MBNA executives survived ahelicopter crash in New York’s East River earlier this month.Their presence in New York led to speculation that they weremeeting with bankers and lawyers about a possible transaction.
“Credit card companies are realizing they may not be ableto make it just as a standalone,” said Peter Boockvar, anequity strategist at Miller Tabak & Co., noting WashingtonMutual Inc.’s
Keefe, Bruyette & Woods and the law firm Cleary GottliebSteen & Hamilton advised Bank of America on the transaction.UBS Securities, Joseph Perella and the law firm Wachtell,Lipton, Rosen & Katz advised MBNA. (Additional reporting byBen Berkowitz, Anna Driver and Scott Malone)