Banc One Corp., parent company of Bank One Utah and other financial subsidiaries, is buying First USA Inc. in a $7.3 billion deal that will create the nation's third-largest credit card operation with a combined 32 million cardholders.
The merger, announced Monday, will marry Banc One, the 10th largest U.S. bank, with one of the nation's fastest-growing credit card companies.First USA issues both Visa cards and Mastercards and controls First USA Paymentech, a processor of credit card payments. Alone, First USA ranks as the nation's No. 4 domestic issuer of Visas and Mastercards.
"First USA will add a powerful new dimension to our competitive arsenal and significantly change the way Banc One can compete in the consumer financial services business," John B. McCoy, Banc One's chairman and chief executive, said in a statement.
Banc One and First USA say they expect the all-stock deal to be completed by May 31.
Terms of the transaction call for First USA's shareholders to receive 1.1659 shares of Banc One stock for each of their own shares. That works out to $52.61 a share based on Friday's market close, or a premium of about 43 percent.
The deal was announced before the start of trading Monday. Banc One shares closed Friday at $45.121/2 each, up 121/2 cents, on the New York Stock Exchange. First USA ended at $36.75, up $2.121/2.
"Our combined strength will enable us to offer a broader range of financial services to our existing customer base," said John C. Tol-le-son, chairman and chief executive of First USA.
After the merger, Tolleson will become a member of Banc One's board of directors, turning over day-to-day control of the operation to First USA's president, Richard W. Vague.