Does a $47 billion deal to combine two banks make sense from a strategic and financial perspective?
Does a $47 billion deal to combine two banks make sense from a strategic and financial perspective?
In 2003, Charlotte, North Carolina-based Bank of America announced it was buying FleetBoston for $47 billion. The acquisition created the second largest U.S. bank, with 33 million retail customers and 2.5 million business clients in 35 nations. At the time, many industry experts questioned whether the two banks were a good fit. In this case, students learn how to evaluate the proposed deal by analyzing the strategic fit between the two banks; comparing the banks' profitability and risks; investigating whether efficiencies would lead to cost savings and additional revenues; and determining whether Bank of America overpaid for FleetBoston.