Wachovia says NO to Citi; Yes to Wells Fargo

[ISiddiqui]

Wells Fargo in a Deal to Buy All of Wachovia - NYTimes.com

In a surprise twist, the West Coast bank, Wells Fargo & Company, said Friday that it had reached an agreement to acquire a rival, the Wachovia Corporation, for about $15.1 billion.

The announcement came just four days after Citigroup had agreed to buy Wachovia’s banking operations of Wachovia for $2.2 billion of about $1 a share. But Wachovia, which is based in Charlotte, N.C., has now apparently rejected that deal in favor of one where the entire company would be acquired. How Citigroup will respond to the news remained a question Friday morning.

In a statement, Wells Fargo, which is based in San Francisco, said that the deal required no assistance from the Federal Deposit Insurance Corporation or any other government agency.

The bank plans to raise up to $20 billion by issuing new shares, primarily common stock.

Under terms of the agreement, which has been approved by directors of each company, Wachovia shareholders will receive 0.1991 shares of Wells Fargo stock in exchange for each share of Wachovia common stock. The transaction, based on Wells Fargo’s closing stock price of $35.16 on Thursday, is valued at $7 a share. Wachovia has almost 2.2 billion common shares outstanding. The agreement requires the approval of Wachovia shareholders and customary approvals of regulators

“This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support,” Wachovia’s chief executive Robert K. Steel, said in a statement. “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.”

[sterlingice]

Wait, so the financial world didn't end ahead of the bailout and now someone even values some of this stuff on the open market to the point where they are bidding for it?

SI

[Shkspr]

Well, until Wells Fargo fails next week, anyway.

[gstelmack]

Originally Posted by sterlingice

Wait, so the financial world didn't end ahead of the bailout and now someone even values some of this stuff on the open market to the point where they are bidding for it?

SI

Yes. Those in decent shape that can afford to eat the bad assets are setting themselves up nicely for once those assets are off the books...

[QuikSand]

Originally Posted by gstelmack

Yes. Those in decent shape that can afford to eat the bad assets are setting themselves up nicely for once those assets are off the books...

I think that's basically it. If you are strong enough to ride out this storm, then Wachovia is worth more together than its components are worth separately. Wells Fargo is pretty strong, and this probably makes sense for them to dramatically increase their footprint.

[ISiddiqui]

Originally Posted by Shkspr

Well, until Wells Fargo fails next week, anyway.

LOL!

[Logan]

It makes a lot more sense. They'll be able to operate in the east, Wells mostly in the west.

[GrantDawg]

Not so fast, my friends....

Wells Fargo, Citigroup battle for Wachovia | ajc.com

[fantom1979]

Seriously... how many banks are left? 4?

[henry296]

Originally Posted by fantom1979

Seriously... how many banks are left? 4?

Actually, around 8,000

[Anthony]

its a race to become the next "too big to allow to fail" institution!

[Scarecrow]

Originally Posted by Anthony

its a race to become the next "too big to allow to fail" institution!

The 1st reality show for the Bloomberg Network. Season premier tonight!!!