NEW YORK (CNN/Money) - Bank of America agreed to buy FleetBoston Financial for $47 billion in stock Monday, creating a bank with 33 million customers that will be home to nearly one dollar out of every 10 deposited in a U.S. bank.

Bank of America agreed to buy FleetBoston Financial for $47 billion in stock. CNNfn's Darby Mullany reports. Play video (Real or Windows Media)

The deal -- one of several big mergers announced Monday -- will solidify Bank of America's spot as the nation's second-biggest bank ranked by assets behind Citigroup and make it the bank with the most retail outlets in the United States.

The transaction, which values FleetBoston at about $45.46 a share, would be the largest merger since the $59 billion deal between drugmakers Pfizer and Pharmacia in July of last year, according to Dealogic.

Shares of FleetBoston (FBF: up $7.40 to $39.20, Research, Estimates) jumped about 25 percent in midday trading while Bank of America (BAC: down $8.29 to $73.57, Research, Estimates) stock sank about 10 percent on the news.

The deal will give Bank of America a foothold it has long sought in the Northeast and comes despite early misgivings about doing a merger at all on the part of FleetBoston CEO Chad Gifford, who will be chairman of the combined company. Bank of America Chairman Kenneth D. Lewis will be CEO.

The combined headquarters will remain in Bank of America's current home, Charlotte, N.C.

"If you want to be in Boston, southern New England and New York, there is no other single road to that destination," Lewis said on a conference call Monday. He said the bank is creating a "fortress franchise."

While it had been the target of merger talks before, Fleet's Gifford said he did not think he would sell the company.

"In candor, I didn't think I would" sell Fleet, Gifford said. "It became increasingly clear to us that scale is a tremendous advantage, if properly managed. Bank of America was the one bank that was taking advantage of this scale."

Industry analysts said the deal does indeed fill a hole for Bank of America and that more bank mergers are likely after this deal.

"The Northeast United States was the biggest hole in Bank of America's footprint, and this fills it," Wayne Bopp, an analyst at Fifth Third Investment Advisors in Cincinnati, told Reuters. "There are many more banks that want to move into the Northeast. It leaves other banks looking at their second and third choices."

Fifth Third Investment owns shares of both banks.

"The market has been waiting for a major announcement like this to be a catalyst for more deals. There could be a domino effect," said Frank Barkocy, an analyst with Keefe Managers, a hedge fund firm that specializes in bank stocks.

(For more on other potential buyout targets in banking, click here. For more on the Anthem-Wellpoint and UnitedHealth-Mid Atlantic health care deals, also announced Monday, click here).

Bank of America was itself formed by a $60 billion merger with NationsBank in 1998. After the deal Bank of America will remain No. 2 behind Citigroup in terms of assets, but is likely to vault ahead of it in deposits.

The combined company will have the largest retail banking network in the nation, with 5,700 branches across 29 states. The deal gives the bank a foothold it has never had in the No. 1 market, New York, as well as market leadership in Massachusetts, Rhode Island, Connecticut and New Jersey.

FleetBoston, the No. 7 bank, has been trying to reposition itself as a consumer bank that takes on less lending risk after being burned by losses in Latin America and by loans to Enron and other troubled companies.

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Under the deal announced Monday, Fleet shareholders will receive 0.5553 share of Bank of America for each of their shares, or about $45.46 a share for Boston-based Fleet based on Friday's closing prices -- a 43 percent premium.

Bank of America expects $1.1 billion in savings from the Fleet purchase, but said it expects 2004 per-share profit to fall below analysts' estimates.

Bank of America Chief Financial Officer James Hance said the bank expects 2004 per-share profit of $7.10, below the $7.24 average analyst estimate, according to Reuters Research.

He said the bank foresees an $800 million after-tax restructuring charge, and $1.1 billion of after-tax savings by 2005. Hance said he did not know how many jobs might be lost.