McLEAN, Va. -- Capital One Financial Corp. has renegotiated its acquisition of Louisiana's largest bank to account for the impact of Hurricane Katrina, reducing its offer for Hibernia Corp. by about 9 percent to $5 billion and delaying the closing of the deal by at least a month.
Capital One had been slated to close on its $5.35 billion acquisition of New Orleans-based Hibernia yesterday, but the companies said yesterday morning that Capital One would now pay only $5 billion and that the transaction would not be completed until some time in the fourth quarter.
If approved by Hibernia shareholders, the deal will give Capital One its own bank, which it could use to bolster its credit card distribution, now done almost entirely through direct mail. And it will give the company access to cheaper funding because banks like Hibernia attract consumer and business deposits.
A number of other acquisitions have occurred in recent months to reduce the number of standalone card issuers, but in the opposite direction.
In early August, a unit of HSBC Holdings PLC snapped up credit card issuer Metris Cos. Inc. for $1.59 billion cash, while Washington Mutual Inc. said it would pay $6.45 billion for card issuer Providian Financial Corp. And Bank of America Corp. said on June 30 it would acquire MBNA Corp. for $35 billion.
Yesterday, marked the second time Capital One delayed closing on the acquisition, which was originally scheduled for Sept. 1.
Hibernia shareholders, who approved the initial deal with 94 percent support, must vote on the revised deal.
The exact value of the cash-and-stock deal will depend on the value of Capital One Stock at the time the deal closes.
Based on Capital One's closing price Tuesday of $80.50, the deal would be $5 billion, or $30.49 for each Hibernia share.