Capital One buying Chevy Chase Bank for $520M
December 1, 2008
Capital One Financial Corp. will acquire Chevy Chase Bank for $520 million in cash and stock. Under the terms of the agreement, McLean, Va.-based Capital One will use $445 million in cash and 2.56 million shares of Capital One valued at $75 million, or about $29.30 per share. Shares of Capital One fell $1.19, or 3.8 per cent, to $30.40 in premarket trading.
Chevy Chase Bank is the latest in a string of regional banks Capital One has purchased in recent years as it expands to become a full-service banking operation after primarily operating as a credit card lender. In November 2005, Capital One bought New Orleans-based Hibernia Corp., which had branches in Texas and Louisiana. In December 2006, the company completed its acquisition of North Fork Bank, which operates banks in New York and New Jersey.
Capital One said the Chevy Chase deal will boost operating earnings in 2009. Capital One added that it expects to incur about $225 million of charges tied to merger and integration costs. But it expects the deal to eventually reduce expenses by $125 million. The deal is expected to close during the first quarters.
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