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Rumor about Citi may be true: Pulls out of WAchovia NOW BEING BOUGHT BY WELLS FARGO
User ID: 460855
10/03/2008 08:53 AM
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Wells Fargo acquiring Wachovia for $15.1 billion
SAN FRANCISCO, Fri Oct 03, 07:45 AM
Exterior view of a Wells Fargo Bank in Sunnyvale, Calif., in this April 16, 2007 file photo. Wells Fargo & Co. is buying Wachovia Corp. for $15.1 billion in stock. (AP Photo/Paul Sakuma, file)
In an abrupt change of course, Wachovia Corp. said Friday it will be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, wiping out Wachovia's previous plan to sell its banking operations to rival suitor Citigroup Inc.
A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp.
The Wachovia-Wells deal, announced Friday, comes in a turbulent time for banks and financial firms as they grapple with the ongoing credit crisis, which led to the recent bankruptcy of Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc.
Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock's Thursday closing price of $3.91. Shares closed at $10 last Friday, the last trading session before the deal with Citigroup was announced.
On Monday, Citigroup had agreed to buy Wachovia's banking operations for $2.16 billion in a deal orchestrated by the federal government.
That deal, which had been approved by the boards of both companies, was still subject to approval by Wachovia's shareholders and regulators.
San Francisco-based 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.
Wachovia shares were up $2.25, or 53 percent, at $6.50 in premarket trading, while Wells Fargo fell $1.40, or 3.8 percent, to $35.31. Citigroup shares were down $3.10, or 13.2 percent, to $20.35.
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