On October 27, 2003, the following appeared in a news release:
Bank of America Corporation and FleetBoston Financial Corporation today announced a definitive agreement to merge, creating the nation’s premier financial services company. The company will bring unmatched convenience, innovation and resources to customers and clients throughout the nation and around the world. The merger, to be accomplished through a stock-for-stock transaction, establishes a new Bank of America that will serve approximately 33 million consumer relationships, with leading market shares throughout the Northeast, Southeast, Midwest, Southwest and West regions of the United States.Under terms of the agreement, FleetBoston Financial stockholders will receive .5553 shares of Bank of America common stock for each of their shares. The exchange ratio was derived from the share price of Bank of America at the close of business on October 22, 2003, to establish the transaction’s value at almost $47 billion, or $45 per FleetBoston Financial share.
Following this announcement, FleetBoston shares rose sharply and Bank of America shares dropped approximately 10%. Discuss these events. How is this different than Bank of America agreeing to pay $45 per share in cash?