Merger to go forward

Wells Fargo wins Wachovia - Combined bank to rival giants BofA and Chase

Excerpts:

The combined company will create a major rival for Charlotte's Bank of America and for New York's JPMorgan Chase.

...

The merger pairs East Coast and West Coast giants that have long been seen as potential partners. It also matches struggling Wachovia with a bank that has survived turbulent times better than most.

...

In the Wells merger, Wachovia shareholders, who need to approve the deal, would receive about a fifth of a Wells share for each Wachovia share. That was equal to $5.43 per share based on Thursday's close. In the takeover, the Wells name would prevail and San Francisco would remain the corporate headquarters of the combined company. Wells has said Charlotte would serve as the company's base for East Coast retail and corporate banking businesses.

...

Wells Fargo said it is seeking expedited Fed approval of the deal as well as a share exchange agreement that would give Wells 39.9 percent of Wachovia's voting power. The Fed said it will immediately begin considering filings submitted by Wells Fargo seeking approval to acquire Wachovia.

In a statement, Wells Chairman Dick Kovacevich reiterated that the two companies have a firm, binding merger agreement, and that he is confident the merger will be completed. The deal is “simply an incredible fit that will result in an immensely strong, stable financial services company that will carry on Wachovia's proud tradition of being one of the very best financial institutions in the world,” Kovacevich said.

...

Nancy Bush of NAB Research said Wells was a better partner for Wachovia. “You guys should be breaking out bottles of champagne,” Bush said. “They will be so much more careful of the corporate culture, of Charlotte, of the customers. They have more retail experience than Citigroup does.”

The fact that Citi backed down indicated that criticism from customers and shareholders had grown too much, she said. Of the legal dispute, “I'm sure (Citi) will ask for a bazillion dollars, and Wells Fargo will give them something,” she said. “There will be some kind of out-of-court settlement.”

James Early of the Motley Fool investment guide said it was “sporting” of Citi to step aside.

“Sounds like they're not going to chop the baby up in pieces,” he said. “Now is not the time to be parceling out a company 18 different ways and fighting over this, that and the other.”

...

Although either deal would certainly result in job cuts in Charlotte, Wachovia executives and employees have favored the Wells purchase. Analysts said blending the Wells and Wachovia cultures, both traditionally known as conservative retail banks, would be easier than meshing the Citi and Wachovia cultures. Splitting the company was also complicated and created ongoing uncertainty.

Comment: Image from the Charlotte Observer. Click on image for Charlotte Observer site.