MBNA's Falling Shares May Make it Ripe for Takeover

By Amy Barrett, with Mike McNamee, BusinessWeek

Bruce L. Hammonds knows how to take a hit. The president and chief executive of credit-card giant MBNA was the quarterback for a semi-pro football team in Maryland after college. It was a low-budget affair; former teammate Mike Foley recalls that he and Hammonds shared equipment. On one play, Hammonds snuck into the end zone for a touchdown — and took such a wallop from an opponent that he broke the helmet he and Foley shared. “You don’t see helmets broken very often,” Foley recalls.

No doubt Hammonds, 57, is feeling the pain from a different sort of impact these days. MBNA became a Wall Street darling in the 1990s by branding its cards with the names of thousands of partners, from the National Education Association to L.L. Bean. But the onetime hard charger has hit a wall: Because of ferocious competition from banks and MBNA’s own missteps, growth has stalled.

As a result, analysts expect MBNA’s earnings to fall this year for the first time since it went public in 1991. After suffering a 25% drop in its share price this year, to around $21, MBNA is suddenly seen as a takeover target. Speculation about a buyout grew after Washington Mutual’s June 6 deal to buy card issuer Providian Financial for $6.5 billion.

For his part, Hammonds, a 23-year company veteran who took over as CEO 18 months ago, downplays the prospect of a deal. While he says the company always puts shareholders first and he would never rule anything out, he adds: “There’s no ‘For Sale’ sign” on MBNA’s Wilmington (Del.) headquarters.

For this complete story, please visit MBNA: One Tough Card Game.