NEW YORK (CNN/Money) - Washington Mutual announced Monday it will purchase Providian Financial in a cash-and-stock banking deal worth $6.5 billion.

Washington Mutual (Research), the nation's largest thrift, will pay the equivalent of 0.45 Washington Mutual common share for each Providian (Research) share, with 11 percent of the total payment being made in cash.

Based on Friday's close, that puts the value of the deal at $18.71 for each share of Providian, or a premium of 4 percent, for one of the largest independent credit card companies.

"This combination helps to further diversify our balance sheet and earnings by adding attractive, high-yielding credit card assets, while improving our net interest margin and adding stable fee income," said a statement from Washington Mutual Chairman and CEO Kerry Killinger.

Providian was hit by a series of consumer class action lawsuits and state enforcement actions in 1999 and 2000, and by 2001 it saw disappointing earnings, a sharp drop in stock price, and an increasing amount of charged-off loans led to Joseph Saunders being named CEO of the company. Shares are up 445 percent during Saunders' 3-1/2 year tenure.

Saunders will continue to head the credit card operations for Washington Mutual out of Providian's San Francisco offices after the deal closes. The deal is expected to be completed in the fourth quarter and should add to Washington Mutual's earnings per share within a year of the deal's closing.

For a look at the other major deals of 2005, click here.