Bank of America Closes MBNA Deal

The transaction makes the Charlotte, N.C. banking outfit the nation's largest card issuer.
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Bank of America

(BAC) - Get Report

kicked off the new year by closing its acquisition of credit card giant

MBNA

(KRB)

.

The deal, valued at about $34.3 billion as of Friday's close, makes the Charlotte, N.C. company the nation's No. 1 card issuer when measured by balances. Bank of America now has nearly $140 billion in active balances and more than 40 million active credit card accounts.

"Today marks the start of an exciting new era for Bank of America in credit cards," said Kenneth D. Lewis, chairman and CEO, in a news release. "The combination of Bank of America's distribution platform and customer base with MBNA's products, affinity relationships and marketing expertise creates significant opportunities for our combined company."

MBNA is well known for its affinity cards, which feature brands such as eBay and L.L. Bean, sports leagues, alumni groups and other associations.

Under the terms of the deal, which was announced in June, Bank of America is paying 0.5009 of a share of its common stock and $4.125 in cash for each share of MBNA common stock. Based upon Bank of America's Friday closing price of $46.15, that equals $27.24 for each MBNA share. MBNA shares finished the week at $27.15.

MBNA's former chief, Bruce Hammonds, will become president of Bank of America's card services unit and a member of its Risk & Capital committee. Meanwhile, Frank Bramble Sr., MBNA's former vice chairman, will join Bank of America's board of directors at its regularly scheduled January meeting.

Bank of America said the deal won't be accretive until 2007. It expects to achieve overall expense efficiencies of $850 million after taxes, to be fully realized by the end of the 2007. It also anticipates a restructuring charge of $1.3 billion after taxes.