The conglomerate said it expected to use $5 billion of Bank of America’s 6% preferred stock that it currently owns to fund the acquisition.
The purchase included warrants to acquire 700 million common shares at $7.14 each, less than one-third Thursday’s closing price of $24.32.
Bank of America on Wednesday boosted its annual dividend to 48 cents per share from 30 cents, beginning in the third quarter.
The dividend increase was approved by the Federal Reserve, which conducts annual “stress tests” of big banks’ ability to handle tough economic and market conditions.
The second-largest U.S. bank also announced a $12 billion stock buyback plan.
Vanguard Group, which is currently BofA’s biggest shareholder, holds 6.6% stake, or about 652 million shares in the company.