Bank of America to Acquire MBNA Corporation in $35 Billion Deal

Bank of America announced a $35 billion deal to acquire the MBNA Corporation, one of the largest issuers of credit cards, in a move aimed at diversifying its business and increasing its cash flow. The bank, already the nation's third-largest, will gain about 20 million new customer accounts and manage $143 billion in customer balances. However, the merger will also result in the elimination of 6,000 jobs and a restructuring charge of $1.25 billion.

Key Takeaways:

• The merger will give Bank of America a more diverse business mix, less dependent on market-sensitive businesses, according to Chairman and CEO Kenneth Lewis.
• The deal will increase the bank's cash flow and financial strength by leveraging MBNA's credit card business.
• Bank of America will manage $143 billion in customer balances, nearly doubling its current customer balances.
• The acquisition will give the bank a foothold in Canada, the United Kingdom, Ireland, and Spain, through MBNA's international presence.
• The merger will eliminate 6,000 jobs, representing a significant workforce reduction.
• Bank of America will take a restructuring charge of $1.25 billion as a result of the deal.
• Approval for the merger has been granted by the boards of both companies, but regulatory and shareholder approval is still pending.

Statistics:

• $35 billion: The value of the deal, making it one of the largest mergers in recent history.
• 20 million: The number of new customer accounts Bank of America will gain through the acquisition.
• $143 billion: The amount of customer balances Bank of America will manage after the merger.
• 6,000: The number of jobs that will be eliminated as a result of the deal.
• $1.25 billion: The restructuring charge Bank of America will take as a result of the deal.

Sources:

• STEVE INSKEEP, host, NPR
• JIM ZARROLI, reporting, NPR News, New York
• Bank of America, statement by Chairman and CEO Kenneth Lewis.