Bank of America to Acquire Fleet for $47 Billion

Bank of America's (BAC Quote) $47 billion agreement to acquire FleetBoston(FBF Quote) will cost it some earnings next year, but executives defended the richly valued deal as a good bet for the companies' shareholders and customers.

Bank of America will exchange stock worth $47 billion to acquire Fleet, adding a massive Northeastern retail franchise to its already sprawling geographical presence and relieving New England of its last major indigenous financial institution.

The transaction, which is expected to close in the first half of next year, should also put to rest months of speculation about the future of FleetBoston, seen by many as ripe for acquisition since stumbling in the post-bubble recession. The bank is coming off its first decent quarterly earnings report in more than a year, after seeing its bottom line hammered by bad loans, particularly to developing countries.

On a conference call to discuss the acquisition, Bank of America said it now expects earnings of $7.10 a share next year, down 2% from analysts' current estimate of $7.27. But the firm said it expects the deal to be accretive by about 1% in 2005 as share buybacks and synergies kick in. Analysts are currently calling for BofA to earn $7.61 a share in 2005. ...