An article was already posted on the announcement that Bank of America was going to buy Fleet Bank but I wanted to point something interesting out about it as well. An excerpt from the article is:
This is probably the closest example there is to a truly efficient market. The new information was priced into the two stocks within hours and ultimately the investors will determine the selling price of Fleet. I personally was very happy about the deal because I owned Fleet stock and made a mini-killing. Another interesting point is that Bank of America is willing to pay for Fleet at a premium over the fair market value(at the time of announcement). I assume this extra amount, which is certainly considerably over the book value, would go into their Goodwill account.
Doug Probasco
Bank of America was offering 0.5553 shares of its stock for each FleetBoston share. At Friday's closing prices, that was worth $45 a share and was a 41 percent premium over FleetBoston's Friday finish of $31.80.
In trading Monday on the New York Stock Exchange, FleetBoston shares climbed to $39.20, up $7.40, or 23 percent, while Bank of America shares fell to $73.57, down $8.29, or 10 percent. That reduced the value of Fleet's offer to $42.9 billion.
This is probably the closest example there is to a truly efficient market. The new information was priced into the two stocks within hours and ultimately the investors will determine the selling price of Fleet. I personally was very happy about the deal because I owned Fleet stock and made a mini-killing. Another interesting point is that Bank of America is willing to pay for Fleet at a premium over the fair market value(at the time of announcement). I assume this extra amount, which is certainly considerably over the book value, would go into their Goodwill account.
Doug Probasco
