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Reuters Wells to buy Wachovia for over $16 billion By Dan Wilchins Fri Oct 3, 10:17 AM ET NEW YORK (Reuters) - Wells Fargo & Co agreed to buy Wachovia Corp for more than $16 billion, besting a US government-backed Citigroup Inc bid for some of its assets, in a deal that would catapult Wells Fargo to the top ranks of national consumer banks.
HQA/Y=YAHOO/EXP=1223082969/L=Gwh3JkWTVvr83 xETQI4VvwuVRTfow0jmp7gADl6p/B=Hf7NAtj8els-/J=1223075769003552/A=540680 9/R=0/* The proposed purchase, announced Friday, would give Wells Fargo a strong branch presence on the East Coast, a major gap in its network. US banks have been scrambling to boost their branch networks to allow them to raise money from depositors since the credit crunch has made borrowing in bond markets increasingly expensive. Wells is buying the whole of Wachovia, including its retail brokerage Wachovia Securities, and its asset management unit, Evergreen. Wells is one of the few major US banks that has remained consistently profitable during the credit crisis, while Citigroup has posted more than $17 billion of net losses in the last three quarters. Citi's deal would have instantly turned it into a retail powerhouse in the United States, while propping up Wachovia, which looked increasingly wobbly after the collapse of Lehman Brothers Holdings Inc.. Citigroup has a relatively small branch network in the US "For Citigroup, this is a real loss ... This was a deal that was going to save them as much as it was saving Wachovia," said Cassandra Toroian, chief investment officer at Bell Rock Capital in Paoli, Pennsylvania. Wells is buying the whole of Wachovia, including its retail brokerage Wachovia Securities, and its asset manager Evergreen. Wells said it expects to incur merger and integration charges of about $10 billion. A Wachovia spokeswoman said neither Citigroup nor the Federal Deposit Insurance Corp is involved in the transaction. Citi officials were not immediately able to comment, although the Citi/Wachovia deal was featured prominently on Citi's website Friday morning. "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. Wachovia's board approved Wells Fargo's offer Thursday night. Wells Fargo said it will raise up to $20 billion, mainly in common equity, to maintain its capital position. It said it expects to incur merger and integration charges of about $10 billion. The combined company will base its East Coast retail and commercial and corporate banking business in Charlotte. Louis will remain the headquarters of Wachovia Securities.
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