NEW YORK, June 30 /PRNewswire-AsiaNet/ –
Bank of America to deliver unparalleled convenience and products for customers
through acquisition of premier credit card company
Bank of America Corporation today announced a definitive agreement to
acquire MBNA Corporation. The acquisition combines the country’s largest
domestic bank with a leading provider of credit card and payment products,
significantly enhancing Bank of America’s product mix and customer reach.
Bank of America will become one of the largest card issuers in the United
States, with $143 billion in managed outstanding balances and 40 million
active accounts, upon completion of the transaction. Bank of America will add
more than 20 million new customer accounts as well as affinity relationships
with more than 5,000 partner organizations and financial institutions.
The acquisition dramatically increases the bank’s opportunity to deepen
customer relationships across the full breadth of the company by delivering
innovative deposit, lending and investment products and services to MBNA’s
customer base.
"Today’s announcement is not only about the creation of one of the world’s
largest card providers. That is compelling in and of itself," said Bank of
America Chairman and Chief Executive Officer Kenneth D. Lewis. "But it’s
really a much larger story about two companies with complementary strengths.
The result will be the country’s top retailer of financial services with the
size and scale to drive distribution and marketing efficiencies."
The deal is expected to close in the fourth quarter of 2005. Under terms
of the agreement, MBNA stockholders will receive 0.5009 shares of Bank of
America common stock for each of their shares plus a cash component of $4.125
per share. Based on the share price of Bank of America at the close of
business on June 28, 2005, the transaction is valued at $35 billion in total
or $27.50 per MBNA share.
Bank of America expects to achieve overall expense efficiencies of $850
million after-tax, which would be fully realized in 2007, and anticipates a
restructuring charge of $1.25 billion after-tax. Cost reductions will come
from a range of sources, including the reduction of 6,000 jobs. Additional
savings will be achieved through the elimination of overlapping technology,
vendor leverage, and marketing expense.
Upon completion of the acquisition, Bank of America will be one of the
leading worldwide payments services companies and issuers of credit, debit,
and prepaid cards based on total purchase volume. The deal would today make
Bank of America the fourth most profitable company in the world.
"This acquisition makes strategic sense for our combined customers and
shareholders. It provides us access to MBNA’s attractive portfolio as well as
their leading product, service and marketing capabilities," Lewis said. "We
can now deepen existing and future customer relationships with differentiated
capabilities to exceed customer expectations and grow market share. This
merger also provides us with an attractive foothold in Canada, the United
Kingdom, Spain and Ireland."
Bruce L. Hammonds, 57, CEO and president of MBNA Corporation, will become
CEO and president of Bank of America Card Services and report to Liam E.
McGee, 50, president, Bank of America Global Consumer and Small Business
Banking. Hammonds will remain in Wilmington, Del., and be part of Bank of
America’s Risk & Capital Committee, which guides the company’s strategic
direction.
"The merger will create one of the largest credit card portfolios and will
give the combined company access to new marketing channels, customers,
products and opportunities for further expansion," Hammonds said. "Both
companies benefit as cross-sell opportunities exist to sell MBNA products to
Bank of America customers and Bank of America products to MBNA customers.
Significant capital strength
The company will maintain significant capital strength and earnings
diversity. About 55 percent of earnings will come from global consumer and
small business banking; 17 percent from global business and financial
services; 11 percent from global capital markets and investment banking and 10
percent from global wealth and investment management.
"For our shareholders, the Bank of America and MBNA combination yields a
diverse business mix less dependent on market-sensitive businesses," Lewis
said. "The financial strength and cash flow generation of the combined entity
should provide significant resources to support future growth."
Last week Bank of America increased its quarterly dividend 11 percent to
50 cents per share. The current dividend yield is approximately 4 percent.
The company will continue to focus on a strong dividend for shareholders.
Additionally, Bank of America’s strong cash flow and capital position,
strengthened by this transaction, should enable the company to continue
repurchasing shares for the foreseeable future.
Commitment to Neighborhood Excellence
Bank of America, a leader in corporate citizenship and philanthropy,
intends to build upon its previously announced 10-year, $750 billion community
development goal to include a specific community development lending and
investment goal for Delaware. The specifics of this goal will be determined
based on future dialogue with Delaware community and civic leaders. With
MBNA’s $60 million annual charitable giving, Bank of America, a worldwide
leader in corporate philanthropy, expects to provide more than $200 million in
annual giving as a result of this combination.
Additional information
Pursuant to the merger agreement, on the effective date of the merger,
Frank P. Bramble, Sr., a vice chairman of MBNA, will be appointed to the Bank
of America Board of Directors.
The agreement has been approved by both boards of directors and is subject
to approval by regulators and MBNA shareholders. Bank of America was advised
in the transaction by Keefe, Bruyette & Woods. Legal counsel was provided to
Bank of America by Cleary Gottlieb Steen & Hamilton. MBNA was advised by UBS
Securities and Joseph Perella. Legal counsel was provided to MBNA by Wachtell,
Lipton, Rosen & Katz.
MBNA
MBNA (NYSE: KRB), the largest independent credit card lender in the world
and a recognized leader in affinity marketing, is an international financial
services company providing lending, deposit, and credit insurance products and
services. MBNA credit cards and related products and services are endorsed by
more than 5,000 organizations worldwide. For more information, visit the
company’s web site at http://www.mbna.com.
Bank of America
Bank of America is one of the world’s largest financial institutions,
serving individual consumers, small and middle market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk-management products and services. The company
provides unmatched convenience in the United States, serving 33 million
consumer relationships with more than 5,800 retail banking offices, more than
16,700 ATMs and award-winning online banking with more than 13 million active
users. Bank of America is the No. 1 overall Small Business Administration
(SBA) lender in the United States and the No. 1 SBA lender to minority-owned
small businesses. The company serves clients in 150 countries and has
relationships with 98 percent of the U.S. Fortune 500 companies and 85 percent
of the Global Fortune 500. Bank of America Corporation stock (NYSE: BAC) is
listed on the New York Stock Exchange.
Notes
Senior management will present details of the merger at 9:30 a.m. ET in
the Hilton room of the Waldorf Astoria Hotel in New York City. The
presentation will be available on a webcast on the Bank of America website at
http://www.bankofamerica.com/investor/.
Senior management will meet with the news media at 11 a.m. ET in the same
location. The press conference will be accessible by calling 877.707.9631, or
785.832.0201 with access code 713300.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about the financial conditions, results of operations and earnings
outlook of Bank of America Corporation and MBNA Corporation. The forward-
looking statements involve certain risks and uncertainties. Factors that may
cause actual results or earnings to differ materially from such forward-
looking statements include, among others, the following: 1) changes in
economic conditions; 2) changes in the interest rate environment; 3) changes
in foreign exchange rates; 4) adverse movements and volatility in debt and
equity capital markets; 5) changes in market rates and prices; 6) political
conditions and related actions by the United States military abroad which may
adversely affect the company’s businesses and economic conditions as a whole;
7) liabilities resulting from litigation and regulatory investigations; 
changes in domestic or foreign tax laws, rules and regulations as well as IRS
or other governmental agencies’ interpretations thereof; 9) various monetary
and fiscal policies and regulations; 10) increased competition; 11) ability to
grow core businesses; 12) ability to develop and introduce new banking-related
products , services and enhancements and gain market acceptance of such
products; 13) mergers and acquisitions and their integration into the company;
14) decisions to downsize, sell or close units or otherwise change the
business mix of the company; and 15) management’s ability to manage these and
other risks. For further information regarding either company, please read
Bank of America and MBNA reports filed with the SEC and available at
http://www.sec.gov.
Additional Information About This Transaction
Bank of America Corporation will file a Form S-4, MBNA will file a Proxy
Statement and both companies will file other relevant documents regarding this
transaction with the Securities and Exchange Commission (the "SEC"). MBNA
will mail the Proxy Statement/Prospectus to its stockholders. These documents
will contain important information about the transaction, and Bank of America
and MBNA urge you to read these documents when they become available.
You may obtain copies of all documents filed with the SEC regarding this
transaction, free of charge, at the SEC’s website (http://www.sec.gov). You
may also obtain these documents, free of charge, from Bank of America’s
website (http://www.bankofamerica.com) under the tab "About Bank of America"
and then under the heading "investor Relations" and then under the item
"Complete SEC Documents". You may also obtain these documents, free of
charge, from MBNA’s website (http://www.MBNA.com) under the tab "About MBNA"
and then under the heading "Investor Relations" and then under the item "SEC
Filings."
Participants in This Transaction
Bank of America Corporation and MBNA Corporation and their respective
directors and executive officers may be deemed participants in the
solicitation of proxies from stockholders in connection with this transaction.
Information about the directors and executive officers of Bank of America and
MBNA and information about other persons who may be deemed participants in
this transaction will be included in the Proxy Statement/Prospectus. You can
find information about Bank of America’s executive officers and directors in
the Registrant’s definitive proxy statement filed with the SEC on March 28,
2005. You can find information about MBNA’s executive officers and directors
in their definitive proxy statement filed with the SEC on March 15, 2005. You
can obtain free copies of these documents from the Registrant or MBNA using
the contact information above.
SOURCE Bank of America
/CONTACT: Reporters: Alexandra Trower of Bank of America,
+1-212-933-3382; or Jim Donahue of MBNA, +1-302-432-1342; or Investors: Kevin
Stitt, +1-704-386-5667, or Lee McEntire, +1-704-388-6780, both of Bank of
America, or Edward H. Murphy of MBNA, 1-800-362-6255/
/Web site: http://www.bankofamerica.com
http://www.mbna.com /
Category: Uncategorized
— asia pr news @ 10:00 pm — 
June 30, 2005
Sorry, comments are closed.