Wells Fargo & Company and the Wachovia Corporation have signed a definitive agreement for the merger of the two companies including all of Wachovia's banking operations in a whole company transaction requiring no financial assistance from the Federal Deposit Insurance Corporation or any other government agency.
Under the agreement, Wells Fargo will acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. In the transaction, Wells Fargo will acquire all of Wachovia and all its businesses and obligations, including its preferred equity and indebtedness, and all its banking deposits.
Under terms of the agreement, which has been approved unanimously by the boards of both companies, Wachovia shareholders will receive 0.19 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock.
The transaction, based on Wells Fargo’s closing stock price of $35.16 on October 2, 2008, is valued at $7 per Wachovia common share for a total transaction value of approximately $15.1 billion. Wachovia has almost 2.2 billion common shares outstanding. The agreement requires the approval of Wachovia shareholders and customary approvals of regulators.
Wells Fargo has said that the combined company will have a strong presence in Charlotte, US, which will be the headquarters for the combined company’s East Coast retail and commercial and corporate banking business. St Louis will remain the headquarters of Wachovia Securities. In addition, three members of the Wachovia board will be invited to join the Wells Fargo & Company board when the transaction is completed.
Robert Steel, president and CEO of Wachovia, said: This deal enables us to keep Wachovia intact and preserve the value of an integrated three 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.
Dick Kovacevich, chairman of Wells Fargo, added: This agreement represents a compelling value for Wachovia shareholders. It provides superior value compared to the previous 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.