Wells Fargo To Buy Wachovia for $15 Billion By Joseph Woelfel The deal, which values Wachovia at $7 a share, is being done without government assistance In a statement Friday, the companies said the transaction requires no financial assistance from the Federal Deposit Insurance Corp. or any other government agency.
Citigroup earlier this week said it reached to acquire all of the banking subsidiaries of Wachovia, but the deal was being done with assistance from the FDIC. Wells Fargo will acquire Wachovia in a stock-for-stock transaction. Included in the deal are all of Wachovia's businesses and obligations, including its preferred equity and debt, and all its banking deposits. Under terms of the deal, Wachovia shareholders will receive 0.1991 a share of Wells Fargo. The transaction, based on Wells Fargo's closing stock price of $35.16 on Thursday, values Wachovia at $7 a share. Shares of Wachovia closed Thursday at $3.91 a share. Wells Fargo said it will record Wachovia's credit-impaired assets at fair value.
The acquisition is expected to "exceed Wells Fargo's internal rate of return goal and add to Wells Fargo's earnings per share in the first year of operations, excluding integration costs, writedowns, transaction charges, and credit reserve build," the company said. Wells Fargo said it expects to incur merger and integration charges of about $10 billion. Wells Fargo intends to issue up to $20 billion of new securities, primarily common stock.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support. The market presence and composition of our businesses, along with our service-oriented cultures, are extraordinarily complementary and this combination creates great potential for sustained stability and growth," said Wachovia President and CEO Robert Steel. <o:p> </o:p>
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