Bank of America announced Monday a US$47 billion takeover of FleetBoston Financial, extending its banking grip across the US at a stunning price.
It was the richest deal on Wall Street since US pharmaceutical groups Pfizer and Pharmacia's US$60 billion merger in April.
"The dam has been broken," said a report by Merrill Lynch banking analysts Edward Najarian and Beth Messmore.
"This is a truly blockbuster deal," they said.
Under the "definitive agreement," Bank of America will pay the entire price in stock, creating the second-largest US financial and banking group after Citigroup, the world number one.
Existing shareholders in FleetBoston would swap each of their shares for 0.5553 shares in Bank of America. The deal valued each FleetBoston share at US$45, 43 percent above the Oct. 22 closing price.
The total value was about US$47 billion in stock.
"This deal seems to be all about size and scope," the Merrill Lynch analysts said. "Although size and scope are not good justifications for the 43 percent acquisition premium that Bank of America paid for FleetBoston, this deal will probably lead to discussions of how other large banks may need to pursue significant merger and acquisition strategies to keep up with Bank of America."
The deal -- approved by both boards but still requiring clearance from regulators and shareholders -- is expected to close in the second quarter of next year.
Standard and Poor's upgraded Bank of America's outlook to "positive" from "stable" and left its credit ratings unchanged.
About 56 percent of earnings would come from consumer and small business banking, about 25 percent from corporate banking, 11 percent from commercial banking and eight percent from wealth management.
The new Bank of America would have 33 million retail customers, and leading banking shares in the US northeast, southeast, midwest, southwest and west, said Bank of America chairman and chief executive Kenneth Lewis, who is to remain chief executive of the expanded Bank of America.
It would boast 2.5 million business clients in the US and 34 other countries.
The pact ends a nine-month search for a partner by FleetBoston and even longer speculation about the future of the bank since it took heavy losses in South America and closed its US investment bank.
FleetBoston chairman and chief executive Chad Gifford, who is to be chairman of the new Bank of America, had tried in vain to cobble together a deal earlier this year with its Boston-based neighbor John Hancock Financial.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
SHOT IN THE ARM: The new system can be integrated with Avenger and Stinger missiles to bolster regional air defense capabilities, a defense ministry report said Domestically developed Land Sword II (陸射劍二) missiles were successfully launched and hit target drones during a live-fire exercise at the Jiupeng Military Base in Pingtung County yesterday. The missiles, developed by the Chungshan Institute of Science and Technology (CSIST), were originally scheduled to launch on Tuesday last week, after the Tomb Sweeping Day holiday long weekend, but were postponed to yesterday due to weather conditions. Local residents and military enthusiasts gathered outside the base to watch the missile tests, with the first one launching at 9:10am. The Land Sword II system, which is derived from the Sky Sword II (天劍二) series, was turned