Wells Fargo bank says to buy rival Wachovia

October 3, 2008

, WASHINGTON, October 3 – US bank Wells Fargo said Friday it was buying rival Wachovia for 15.1 billion dollars in stock, ending a government-backed plan for Citigroup to take over Wachovia\’s banking operations.

Wells Fargo and Wachovia "signed a definitive agreement for the merger of the two companies" without government assistance, the two firms said in a statement.

It said the deal covered "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."

Wells Fargo will record Wachovia\’s distresses assets "at fair value," the statement said. The acquisition will cost Wells Fargo some 10 billion dollars in integration expenses, and the San Francisco-based bank will issue up to 20 billion dollars in securities to bolster its capital position.

Under terms of the deal approved unanimously by the boards of both companies, Wachovia shareholders will receive 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock, they said.

The transaction, which was based on Wells Fargo\’s closing stock price of 35.16 dollars on October 2, is valued at 7.00 dollars per Wachovia common share for a total transaction value of approximately 15.1 billion dollars, the companies said.

Wachovia has almost 2.2 billion common shares outstanding. The agreement requires Wachovia shareholder and regulatory approval.

"Today\’s announcement creates one of the strongest financial firms in the world and is great for all Wachovia constituencies: our shareholders, customers, colleagues and communities. This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," said Robert Steel, president and chief executive of Wachovia Corp.

"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."

Wells Fargo chairman Dick Kovacevich said the deal was "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."

Wachovia, the fourth largest US bank by assets, had been negotiating a merger with banking giant Citigroup, as Wachovia faced a near collapse in its share price amid a grave financial crisis.

Citigroup late last month had agreed to buy Wachovia\’s banking operations in a deal that gave the US government a stake in Citigroup.

The Wells Fargo statement said the board at Wachovia had accepted its offer late Thursday.

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