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Bank of America, based in Charlotte, North Carolina, will pay $45 per share for Boston-based Fleet, more than 41 percent above the Friday closing price for Fleet. FleetBoston shareholders will receive 0.5553 Bank of America common share for each of their shares.

The merger addresses the desire of Bank of America Chairman and Chief Executive Kenneth Lewis to expand into New England, an area dominated by Fleet and where Bank of America lacks a branch presence.

"It sounds like a full price," said Wayne Bopp, an analyst at Fifth Third Investment Advisors in Cincinnati, whose $31 billion of assets includes both banks' shares. "The northeast United States was the biggest hole in Bank of America's footprint, and this fills it."

Bank of America is the No. 3 bank by assets, with $737 billion as of Sept. 30, while Fleet ranks No. 7, with $196 billion. The combined company will displace J.P. Morgan Chase & Co. as No. 2 in assets, and rank behind Citigroup Inc. .

The combined company will employ about 180,000 people and have nearly 5,700 banking offices.

The merger is expected to close in the first half of 2004, the companies said.

JOINT LEADERSHIP

Lewis will be CEO of the combined company, while Fleet Chairman and CEO Chad Gifford will become chairman. The board of directors will have 12 members from Bank of America and seven from Fleet.

Fleet has been increasingly focusing on its retail operations and trying to leave behind billions of dollars of bad loans to companies such as Enron Corp. and in Latin America.

"With Bank of America's oversight, we think that Fleet will do better," said David Katz, chief investment officer of Matrix Asset Advisors Inc. in New York, whose $950 million of assets includes both banks' shares. "They are buying a company that has a great footprint and has been undermanaged historically."

Fleet had been the subject of merger talks with Boston-based John Hancock Financial Services Inc., which agreed last month to be bought by Canada's Manulife Financial Corp.

"There are many more banks that want to move into the northeast than there are banks available for sale," said Bopp. "It leaves other banks looking at their second and third choices."

Banc of America Securities (News - Websites) and Goldman Sachs & Co. advised Bank of America on the merger. Morgan Stanley advised Fleet.