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Capital One Financial to Buy North Fork Bancorp

March 14, 2006|From Reuters

NEW YORK — Capital One Financial Corp., in its second bank purchase in a year, said Monday that it would buy North Fork Bancorp Inc. for $14.6 billion, reducing its dependence on credit cards.

The combined company would be the No. 8 U.S. bank, behind Atlanta's SunTrust Banks Inc. and ahead of Cleveland's National City Corp.

Capital One, the fourth-largest U.S. Visa and MasterCard issuer, is still integrating New Orleans' Hibernia Corp., which it bought in November for about $5 billion.

It had cut that purchase price after Hurricane Katrina struck the Gulf Coast.

"Capital One is becoming much more bank-like," said Anton Schutz, who runs the Burnham Financial Services Fund.

The stock-and-cash deal would give McLean, Va.-based Capital One $84 billion in deposits, more than 50 million accounts and 655 branches, including 353 from North Fork in New York, New Jersey and Connecticut.

"With North Fork, Capital One will be more balanced and more diversified," said Richard Fairbank, Capital One's chief executive.

North Fork shares closed up $3.80, or 15%, at $29.20. Capital One fell $6.82, or 7.6%, to $83.10, reducing the value of the merger to about $13.9 billion.

Other bank stocks were mixed on the news.

Merger talks heated up after Fairbank played golf a few times with North Fork Chief Executive John Kanas and said he had had employees visit 86 North Fork branches anonymously, calling it "mystery shopping."

North Fork, based in Melville, N.Y., has grown through acquisitions -- including the $6.2-billion purchase in 2004 of mortgage specialist GreenPoint Financial Corp. -- into one of the 20 largest U.S. banks.

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