Wells Fargo grabs Wachovia, Citigroup out
Holy double take! Forget Citigroup's alleged deal for Wachovia. Wells Fargo just announced it is acquiring Wachovia in an all-stock transaction worth about $15.1-billion. Wachovia's talks with rival suitor Citigroup are kaput. In the new deal, Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock they own, valuing Wachovia Corp. at about $7 per share. Here's what Wachovia CEO Bob Steel says about the deal:
"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.”
To me, a Floridian, this is great news! Wells Fargo, based in California, is a powerful banking company with a market value topping $116-billion and a track record that's managed to avoid many pitfalls that snared other big banks. Plus it is brand new to Florida, so this state benefits from a new competitor sure to shake up dominant Bank of America. And it takes Citigroup out of the retail banking scene here (by its backing away from Wachovia) which, frankly is okay with me. Citi has more than a few problems to work out that could have come back to haunt Floridians down the road. Also, Wells is buying all of Wachovia, not just the bank. That means Wachovia Securities -- the brokerage business left out of the Citigroup deal -- will become part of Wells and not be left on its own.
Wells Fargo will record merger and integration charges of about $10-billion, but says it expects earnings to be boosted within the first year after the acquisition closes. No government assistance is part of the deal terms.
-- Robert Trigaux, Times Business Columnist