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Banco Bilbao Buying Compass

The deal is worth $9.6 billion.

Compass Bancshares


is being acquired by Spain's No. 2 bank,

Banco Bilbao Vizcaya Argentaria


for $9.6 billion in cash and stock.

BBVA is offering Compass shareholders either 2.8 of BBVA American depositary receipts or $71.82 in cash per common share. BBVA is expecting to issue a total of 196 million shares and about $4.6 billion in cash, it says.

Shares of Compass had soared on Thursday amid speculation that the Birmingham, Ala., bank was indeed about to be acquired. The stock hit a 52-week high on Thursday of $66.67.

Shares were up $3.96, or 6%, to $70.33 on Friday. Shares of BBVA, the No. 2 Spanish bank behind


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, fell 72 cents, or 2.7%, to $25.51.

The acquisition solidifies BBVA's presence in the U.S., particularly Texas, as it moves to take advantage of the large immigrant banking clientele along the U.S.-Mexican border. The purchase price represents a 16% premium to Compass' closing stock price on Wednesday and a 39.5% premium to the bank's core deposits.

BBVA has made several small acquisitions in the state over the last two years, including Texas Regional Bancshares of McAllen and State National Bancshares of Fort Worth last June. In 2005, BBVA acquired Laredo National Bancshares, which gave the company 45 branches near the Mexican border.

One the deal is completed, which is expected later this year, BBVA will have 326 branches in the state.

BBVA also has a small presence in California.

Compass, which has $34 billion in assets, has a total of 415 branches located in Alabama, Arizona, Colorado, Florida, New Mexico and Texas.

Sandler O'Neill & Partners acted as the financial adviser to Compass.

Morgan Stanley

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advised BBVA.