BofA to buy Fleet for $47bn
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FleetBoston is the No. 7 U.S. bank by assets and deposits.
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NEW YORK (CNN/Money) -- Bank of America, the second-largest U.S. bank, agreed to buy FleetBoston Financial for $47 billion in stock, creating an institution with 33 million customers and home to almost one dollar out of every 10 deposited in a U.S. bank.
Fleet shareholders will receive 0.5553 share of Bank of America for each of their Fleet shares under terms of the all-stock deal. That comes to about $45.46 a share for Fleet, or about a 43 percent premium, based on Friday's closing prices.
The transaction would be the largest takeover since the $59 billion deal between drug makers Pfizer and Pharmacia in July 2002, according to Dealogic. The banks announced that Fleet CEO Chad Gifford will be chairman of the combined company, while Bank of America's Kenneth D. Lewis will retain his position as CEO and the combined headquarters will remain in Charlotte.
The current Bank of America was formed by a $60 billion 1998 merger with NationsBank. It already has leading deposits in California and Washington state, as well as Florida and Maryland, and No. 2 position in seven other states, including Texas, Arizona, North Carolina and South Carolina.
Bank of America was already second only to Citigroup in terms of assets, and this combination is likely to vault it into the lead in terms of bank deposits. It will have the largest retail banking network in the nation, with 5,700 branches across 29 states. The deal gives the bank a foothold it has never had in the No. 1 market, New York, as well as market leadership in Massachusetts, Rhode Island, Connecticut and New Jersey.
The deal makes the combined bank first, second or third in market share in 21 of the 29 states in its retail footprint. It also will have significant market shares in 21 of the nation's 30 largest metropolitan areas, and be first, second or third in 23 of the 30 fastest-growing metropolitan areas
FleetBoston, the No. 7 U.S. bank in terms of both assets and deposits, recently has sought to reposition itself as a consumer bank that takes on less lending risk after being burned by losses in Latin America and by loans to such companies as the collapsed Enron Corp.
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