According to a report in the Wall Street Journal, San Francisco-based Wells Fargo has won the fight over the acquisition of Wachovia. Citi (New York), which had placed the original bid for the Charlotte-based financial institution, has turned its back on negotiations of a compromise deal in which the east and west coast banks might split Wachovia due to concerns about the quality of some of Wachovia's assets.
Wells Fargo is now clear to proceed with its acquisition offer that it made to Wachovia just days after Citi announced it would be purchasing the institution. Wells Fargo expects to close the deal by the end of the year.
Citi, however, will continue to seek compensatory and punitive damages for bad faith breach of contract and tortious interference, the bank said in a statement.
For Wells Fargo, the purchase means the creation of a stronger coast-to-coast banking franchise. Under terms of the agreement, Wachovia shareholders will receive 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock. The transaction, based on Wells Fargo's closing stock price of $35.16 on October 2, 2008, is valued at $7.00 per Wachovia common share for a total transaction value of approximately $15.1 billion. The agreement requires the approval of Wachovia shareholders and customary approvals of regulators.
According to Wells Fargo, the combined company's east coast retail and commercial and corporate banking business will be based in Charlotte. St. Louis will remain the headquarters of Wachovia Securities. In addition, three members of the Wachovia board will be invited to join the Wells Fargo board when the transaction is completed.
The combined entity will have assets of $1.4 trillion.