Wachovia to be Acquired by Wells Fargo for $15.1 Billion?News Update: Bailout Bill Signed by Bush; New Credit Union Chartered
The agreement, announced by both companies, calls for Wells Fargo to acquire all of Wachovia's business and assets in a deal valued at $15.1 billion. This agreement has been approved by the boards of directors of both companies, and now awaits signoff from Wachovia shareholders and federal regulators.
This merger is a 180-degree turnaround from the news announced earlier this week by the FDIC, which had facilitated an agreement for Citigroup (NYSE: C) to negotiate the acquisition of only Wachovia's banking subsidiaries for a stock transaction valued at $2.16 billion.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," said Wachovia President and Chief Executive Robert Steel in a joint press release.
"This agreement represents a compelling value for Wachovia shareholders," said Wells Fargo Chairman Dick Kovacevich. "It provides superior value to the [Citigroup] 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."
In response to this news, FDIC Chair Sheila Bair released a statement saying, "Since the close of our bidding process, Wells has apparently re-assessed its position and come forth with this new offer that does not require FDIC assistance. It should be emphasized that both the Citigroup proposal as well as the new Wells proposal would stand behind all creditors including depositors, insured and uninsured. Under either proposal, all banking customers of the merged institutions would be fully covered with no disruptions in service.
"The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest."
In a joint release by the Federal Reserve Board of Governors and Office of the Comptroller of the Currency, regulators said:
"A new proposal to acquire Wachovia has emerged from Wells Fargo. The Citigroup proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency. We have not yet reviewed the new Wells Fargo proposal and the issues that it raises. The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability."
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