updated 12/4/2006 7:55:14 AM ET 2006-12-04T12:55:14

Bank of New York Co. has agreed to take over Mellon Financial Corp. in a $16.5 billion all-stock deal that will create the world's largest securities servicing company and one of the biggest asset managers.

Bank of New York's shareholders will receive 0.9434 shares in the new company for each share of Bank of New York that they own, and Mellon shareholders will receive one share in the new company for each Mellon share they own. Bank of New York and Mellon have entered into mutual stock option agreements for 19.9 percent of the issuer's outstanding common stock.

The new company, which will be called Bank of New York Mellon Corp., will be the world's leading asset servicer with $16.6 trillion in assets under custody and corporate trustee with $8 trillion in assets under trusteeship. It will rank among the top 10 global asset managers with more than $1.1 trillion in assets under management.

Thomas A. Renyi, chairman and chief executive of Bank of New York, will serve as executive chairman of Bank of New York Mellon for 18 months following the close of the deal with overall responsibility for the integration of the two companies.

Robert P. Kelly, currently president, chairman and chief executive of Mellon, will serve as chief executive of the new company and will succeed Renyi as chairman of the board. Gerald L. Hassell, currently president of Bank of New York, will hold the same position in the new company.

The board of directors will have 10 members designated by Bank of New York and eight members designated by Mellon. The new company's headquarters will be based in New York City.

The deal is expected to be complete in the third quarter of next year.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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