|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Wachovia Now To Couple With Wells Fargo While CITI Sleeps
Four Days After Agreeing In Principle To Sell Its Banking Unit To Citigroup, Wachovia Signs A "Whole Company" Deal With Wells Fargo.
Marie Leone
CFO.com. October 3, 2008
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EXCERPT: Just four days after agreeing in principle to sell its banking unit to Citigroup, Wachovia today announced a dramatic about-face, signing deal instead to be acquired in its entirety by Wells Fargo. Emphasizing that the deal would take place "without government assistance," Wells Fargo & Company and Wachovia Corporation signed a definitive agreement to merge in a $15.1 billion stock-for-stock transaction. The deal includes all of Wachovia's businesses, including its securities and asset management units, and will require "no financial assistance from the Federal Deposit Insurance Corporation or any other government agency," noted Wells Fargo in a statement released early Friday morning. Citigroup did not immediately respond to CFO.com's request for a comment. The early-morning announcement pulls the plug on the tentative deal Wachovia reached with Citigroup four days ago. In that deal, Citi agreed to buy just Wachovia's banking subsidiaries for $2.16 billion. Also, Citi was set to acquire more than $700 billion of assets of Wachovia's banking subsidiaries and retail liabilities, and accept loss protection from the FDIC on $312-billion worth of mortgage related and other Wachovia assets. The Citi transaction, like the Wells Fargo deal, was approved by both boards. The sudden switch to Wells Fargo was likely prompted by the idea that Wachovia would not have to sever its banking unit from its other businesses, as was required in the Citi deal. As a result, Wells Fargo chairman Dick Kovacevich, commented on Friday that current agreement "avoids the complexity and unavoidable loss of value in trying to separate" the units. Under the agreement, which was approved unanimously by the boards of both companies, Wells Fargo will acquire all outstanding shares of common stock of Wachovia, which means the San Francisco based bank will own all of Wachovia Corporation, and all of its businesses and obligations, including preferred equity and indebtedness, plus all of its banking deposits. |
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