Bank of America Corp. is unlikely to
have any competitors challenging its $48 billion bid for
FleetBoston Financial Corp., even though FleetBoston has drawn
interest in the past from other banks, the New York Times
reported Wednesday, citing bankers and analysts.
The two banks have provisions in their merger agreement that
would make it expensive for another to make a hostile offer,
which are rarely successful among banks, the Times said, citing
analysts and advisers. Nancy Bush, an independent bank analyst,
said banks’ boards “are too entrenched, and shareholders tend to
side with management,” the Times said.
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Bank of America’s shares, which fell more than 10 percent
after the company announced its bid on Monday, dropped almost 1
percent more yesterday, to $72.85 a share.
A safeguard against a third party’s disrupting the agreement
consists of options that Bank of America and FleetBoston granted
each other to buy almost 20 percent of the other’s shares, a
provision that would make it expensive for another bank to make a
competing offer, the Times said.
Bloomberg News
