Wachovia, the struggling Charlotte-based financial giant that is also our area’s largest bank, began the week selling its banking operations to Citibank, but has now changed its mind by weeks end and is selling all of its financial operations instead to San Francisco-based Wells Fargo.
In an abrupt change of course, Wachovia Corp. said Friday it will be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, wiping out Wachovia’s previous plan to sell its banking operations to rival suitor Citigroup Inc.
A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp.
The Wachovia-Wells deal, announced Friday, comes in a turbulent time for banks and financial firms as they grapple with the ongoing credit crisis, which led to the recent bankruptcy of Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc.
Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock’s Thursday closing price of $3.91. Shares closed at $10 last Friday, the last trading session before the deal with Citigroup was announced.
On Monday, Citigroup had agreed to buy Wachovia’s banking operations for $2.16 billion in a deal orchestrated by the federal government.
That deal, which had been approved by the boards of both companies, was still subject to approval by Wachovia’s shareholders and regulators.