Wachovia to be Acquired by Wells Fargo for $15.1 Billion?

News Update: Bailout Bill Signed by Bush; New Credit Union Chartered
Wachovia to be Acquired by Wells Fargo for $15.1 Billion?
In a stunning move announced early Friday morning, Wells Fargo & Company (NYSE:WFC) and Wachovia Corporation (NYSE:WB) have signed a definitive agreement to merge their operations in a stock-for-stock transaction requiring no government assistance.

The agreement, announced by both companies, calls for Wells Fargo to acquire all of Wachovia's business and assets in a deal valued at $15.1 billion. This agreement has been approved by the boards of directors of both companies, and now awaits signoff from Wachovia shareholders and federal regulators.

This merger is a 180-degree turnaround from the news announced earlier this week by the FDIC, which had facilitated an agreement for Citigroup (NYSE: C) to negotiate the acquisition of only Wachovia's banking subsidiaries for a stock transaction valued at $2.16 billion.

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," said Wachovia President and Chief Executive Robert Steel in a joint press release.

"This agreement represents a compelling value for Wachovia shareholders," said Wells Fargo Chairman Dick Kovacevich. "It provides superior value to the [Citigroup] offer to acquire only the banking operations of the company, and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world's great financial services companies."

In response to this news, FDIC Chair Sheila Bair released a statement saying, "Since the close of our bidding process, Wells has apparently re-assessed its position and come forth with this new offer that does not require FDIC assistance. It should be emphasized that both the Citigroup proposal as well as the new Wells proposal would stand behind all creditors including depositors, insured and uninsured. Under either proposal, all banking customers of the merged institutions would be fully covered with no disruptions in service.

"The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest."

In a joint release by the Federal Reserve Board of Governors and Office of the Comptroller of the Currency, regulators said:

"A new proposal to acquire Wachovia has emerged from Wells Fargo. The Citigroup proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency. We have not yet reviewed the new Wells Fargo proposal and the issues that it raises. The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability."

In related news today:

Bailout Bill Signed by President - The controversial $700 billion financial market bailout bill, which won the support of the U.S. Senate on Wednesday, was quickly signed by President Bush after it was approved by the House of Representatives Friday afternoon by a 263-171 vote. The House rejected the bill earlier in the week, but gave it a fresh look after revisions that include tax breaks and a one-year hike in government-insured deposits from a $100,000 limit to $250,000 per account.

Sept. Job Cuts Higher than Expected - The Labor Dept.'s monthly jobs report shows that 159,000 jobs were lost in Sept. - nearly 60,000 more than analysts expected - bringing the year's total job losses to 760,000. The unemployment rate remains at 6.1%, the same as August. This report is expected to fuel the House debate of the $700 billion bailout bill.

New Texas Credit Union Chartered - in a bit of good news, The National Credit Union Administration (NCUA) announced Thursday that it has issued a new federal charter for Oak Cliff Christian Federal Credit Union in Dallas, Texas. The credit union will serve members and employees of the Oak Cliff Bible Fellowship Church and its subsidiaries, as well as students of the fellowship Christian Academy. The new institution could have as many as 8,500 members.

About the Author

Tom Field

Tom Field

Senior Vice President, Editorial, ISMG

Field is responsible for all of ISMG's 28 global media properties and its team of journalists. He also helped to develop and lead ISMG's award-winning summit series that has brought together security practitioners and industry influencers from around the world, as well as ISMG's series of exclusive executive roundtables.




Around the Network

Our website uses cookies. Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing cuinfosecurity.com, you agree to our use of cookies.