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Compass Accepts Offer from Spanish Bank

By Associated Press

Birmingham, AL – Compass Bancshares Inc., which operates banks from Arizona to Florida, said Friday that it is being purchased by Spain-based Banco Bilbao Vizcaya Argentaria S.A. in a cash and stock deal valued at about $9.6 billion.

The transaction consists of roughly $4.6 billion in cash and about 196 million shares of Banco Bilbao common stock.

Compass will become a subsidiary of Banco Bilbao, with Banco merging its U.S.-based banking affiliates with Compass.

The boards of both companies have already approved the deal, which is expected to close in the fourth quarter of 2007.

The deal is a 16.3 percent premium over Compass' closing stock price of $61.78 Wednesday on the Nasdaq Stock Market. Compass shares jumped to $66.37 by the close Thursday.

Compass shareholders can choose to receive either 2.8 Banco Bilbao American depository shares or $71.82 in cash per Compass share.

After the acquisition is complete, Compass will rank among the top 25 banks in the United States with about $47 billion in total assets, $32 billion in total loans and $33 billion in total deposits.

"BBVA is seeking to become a global and diversified bank, with a focus on high-growth markets," BBVA Chief Executive Jose Ignacio Goirigolzarri said.

BBVA shares fell as the bank said it would sell more shares to help pay for the deal. The stock opened Friday with steep losses, but rebounded slightly by midmorning, down 2.2 percent at 19.54 euros ($25.67).

BBVA plans to issue 196 million new shares, worth around $5 billion. It will also sell stakes in several companies, including a stake of more than 5 percent in Spanish utility Iberdrola SA, which will result in capital gains of about 844 million euros ($1109 million), according to Goirigolzarri.

The boards of both companies have already approved the deal, which is expected to close in the fourth quarter of 2007.

Banco Bilbao is Spain's second largest bank by market value after Banco Santander. Its Mexico-U.S. division includes Bancomer, Mexico's largest bank, as well smaller operations in Puerto Rico, California, Texas and Banco's U.S.-Mexico money transfer business. In June Banco Bilbao announced its acquisition of two Texas banks, to become the fourth-largest bank in the state.

The transaction has been approved by Compass' board and the relevant bodies of Banco Bilbao.

The deal is expected to close in the second half of the year, subject to customary closing conditions including necessary bank regulatory approvals in the U.S. and Spain and the approval of the stockholders of both Compass and Banco Bilbao.

D. Paul Jones, Jr., Compass' chairman and chief executive officer, called the merger a "compelling combination."

He said it is expected to generate continued growth for Compass, particularly in the Southwest, and Compass will gain "the benefits of greater scale, scope and financial resources."

Francisco Gonzalez, chairman and chief executive officer of BBVA, said in a statement that Compass "has built a strong and highly profitable franchise that is well-positioned for continued growth."

"We are confident that by combining Compass with our banking operations in Texas, we can leverage the resources of BBVA to provide greater value for the shareholders of both companies," he said.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

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