Bank of America 2004 Annual Report Download - page 110

BANK OF AMERICA 2004 109
(Dollars in millions)
Purchase price
FleetBoston common stock exchanged (in thousands) 1,068,635
Exchange ratio (as adjusted for the stock split) 1.1106
Total shares of the Corporation’s common stock exchanged (in thousands) 1,186,826
Purchase price per share of the Corporation’s common stock(1) $ 38.44
Total value of the Corporation’s common stock exchanged $ 45,622
FleetBoston preferred stock converted to the Corporation’s preferred stock 271
Fair value of outstanding stock options, direct acquisition costs and
the effect of FleetBoston shares already owned by the Corporation 1,360
Total purchase price $ 47,253
Allocation of the purchase price
FleetBoston stockholders’ equity $ 19,329
FleetBoston goodwill and other intangible assets (4,709)
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Securities (84)
Loans and leases (770)
Premises and equipment (738)
Identified intangibles 3,243
Other assets and deferred income tax 243
Deposits (313)
Other liabilities (286)
Exit and termination liabilities (658)
Long-term debt (1,182)
Fair value of net assets acquired 14,075
Estimated goodwill resulting from the Merger $ 33,178
(1) The value of the shares of common stock exchanged with FleetBoston shareholders was based upon the average of the closing prices of the Corporation’s common stock for the period commencing two
trading days before, and ending two trading days after, October 27, 2003, the date of the Merger Agreement, as adjusted for the stock split.
Note 2 Merger and Restructuring Activity
FleetBoston
Pursuant to the Agreement and Plan of Merger, dated October 27,
2003, by and between the Corporation and FleetBoston (the Merger
Agreement), the Corporation acquired 100 percent of the outstanding
stock of FleetBoston on April 1, 2004, in a tax-free merger, in order
to expand the Corporation’s presence in the Northeast. FleetBoston’s
results of operations were included in the Corporation’s results begin-
ning April 1, 2004.
As provided by the Merger Agreement, approximately 1.069 bil-
lion shares of FleetBoston common stock were exchanged for approx-
imately 1.187 billion shares of the Corporation’s common stock, as
adjusted for the stock split. At the date of the Merger, this represented
approximately 29 percent of the Corporation’s outstanding common
stock. FleetBoston shareholders also received cash of $4 million in
lieu of any fractional shares of the Corporation’s common stock that
would have otherwise been issued on April 1, 2004. Holders of
FleetBoston preferred stock received 1.1 million shares of the
Corporation’s preferred stock. The Corporation’s preferred stock that
was exchanged was valued using the book value of FleetBoston pre-
ferred stock. The depositary shares underlying the FleetBoston pre-
ferred stock, each representing a one-fifth interest in the FleetBoston
preferred stock prior to the Merger, now represent a one-fifth interest
in a share of the Corporation’s preferred stock. The purchase price
was adjusted to reflect the effect of the 15.7 million shares of
FleetBoston common stock that the Corporation already owned.
The Merger was accounted for under the purchase method of
accounting in accordance with SFAS No. 141, “Business
Combinations” (SFAS 141). Accordingly, the purchase price was allo-
cated to the assets acquired and the liabilities assumed based on
their estimated fair values at the Merger date as summarized below.