From Deseret News archives:
Wells Fargo agrees to buy Wachovia for $15.1 billion
The stock swap values Charlotte-based Wachovia, led by Chief Executive Officer Robert K. Steel, at $7 a share, the companies said in a joint statement today. Wachovia traded at $6.92 in 9:54 a.m. New York Stock Exchange composite trading, up 77 percent from yesterday. Wells Fargo rose 9.6 percent to $38.55 in 9:53 a.m. New York Stock Exchange composite trading. Citigroup dropped 12 percent to $19.70.
Wells Fargo, whose biggest stakeholder is billionaire Warren Buffett's Berkshire Hathaway Inc., said its offer keeps Wachovia intact and needs no U.S. assistance. Citigroup's bid of $2.16 billion on Sept. 29 for Wachovia's banking businessesvalued at about $1 sharerelied on help from the Federal Deposit Insurance Corp. and left out the securities brokerage and Evergreen mutual-fund units.
"It provides superior value compared to the previous offer to acquire only the banking operations of the company," Richard Kovacevich, 64, chairman of San Francisco-based Wells Fargo, said in the statement. "Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo."
As far as Citigroup is aware, its agreement with Wachovia is still in place, said a person familiar with Citigroup's position. Regulators will review the Wells Fargo bid "to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability," according to a statement from the Federal Reserve.
"Citigroup loses an attractive, accretive deal," Fox-Pitt Kelton Cochran Caronia Waller analyst David Trone wrote in a note today, adding that the Citi deal is probably dead. "Citi will be on the sidelines waiting for the call from the Fed for assistance on bailouts, but not aggressively bidding on troubled franchises," he said. The bank may cancel its $10 billion share offering, Trone said. "One silver lining is that Citi can refocus on its own operational problems."
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