Bank of America 2005 Annual Report Download - page 144

BANK OF AMERICA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
Under the terms of the MBNA Merger Agreement, MBNA stockholders received 0.5009 of a share of the
Corporation’s common stock plus $4.125 for each MBNA share of common stock. As provided by the MBNA Merger
Agreement, approximately 1,260 million shares of MBNA common stock were exchanged for approximately 631 million
shares of the Corporation’s common stock. At the date of the MBNA Merger, this represented approximately 16 percent
of the Corporation’s outstanding common stock. MBNA shareholders also received cash of $5.2 billion. On November 3,
2005, MBNA redeemed all shares of its 7
1
⁄ 2 % Series A Cumulative Preferred Stock and Series B Adjustable Rate
Cumulative Preferred Stock, in accordance with the terms of the MBNA Merger Agreement.
The MBNA Merger will be accounted for under the purchase method of accounting in accordance with SFAS 141.
The purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair
values at the MBNA Merger date as summarized below. This allocation is based on management’s current estimation
and could change as the fair value calculations are finalized and more information becomes available.
(Unaudited)
(In millions, except per share amounts)
Purchase price
Purchase price per share of the Corporation’s common stock(1) ............................................... $45.856
Exchange ratio ........................................................................................ 0.5009
Purchase price per share of the Corporation’s common stock exchanged ................................... $22.969
Cash portion of the MBNA Merger consideration .......................................................... 4.125
Implied value of one share of MBNA common stock ........................................................ 27.094
MBNA common stock exchanged ........................................................................ 1,260
Total value of the Corporation’s common stock and cash exchanged ...................................... $34,139
Fair value of outstanding stock options and direct acquisition costs .......................................... 440
Total purchase price ......................................................................... $34,579
Allocation of the purchase price
MBNA stockholders’ equity ............................................................................. $13,410
MBNA goodwill and other intangible assets ............................................................... (3,564)
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Loans and leases .................................................................................. (270)
Premises and equipment ........................................................................... (588)
Identified intangibles(2) ............................................................................. 8,080
Other assets ...................................................................................... (824)
Deposits .......................................................................................... (100)
Exit and termination liabilities ...................................................................... (1,185)
Other liabilities and deferred income taxes ............................................................ (706)
Long-term debt .................................................................................... (404)
Estimated fair value of net assets acquired ........................................................ 13,849
Estimated goodwill resulting from the MBNA Merger(3) .................................... $20,730
(1) The value of the shares of common stock exchanged with MBNA 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, June 30,
2005, the date of the MBNA Merger Agreement.
(2) Includes core deposit intangibles of $204 million, purchased credit card receivables of $5,468 million, affinity relationships of $2,018
million and other intangibles of $390 million. The amortization life for core deposit intangibles is 10 years and purchased credit
card receivables and affinity relationships are 15 years.
(3) No Goodwill is expected to be deductible for tax purposes. Goodwill will be allocated to Global Consumer and Small Business
Banking.
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