/PRNewswire/ -- Despite earlier improvements in credit and equity markets and corporate balance sheets, U.S. merger and acquisition (M&A) activity remained sluggish in the first half of 2010. Unforeseen economic events in the last two months triggered a global ripple effect reviving sentiments of uncertainty -- setting the stage for a challenging M&A environment for large cap transactions in the second half, according to the Transaction Services practice at PricewaterhouseCoopers, LLP (PwC). However, PwC contends that the middle market may be a different story.
"Going into the second half, record dry powder in the private equity space and unprecedented cash levels on the balance sheets of corporate America will combine with the desire of family held businesses and private equity backed management teams to sell prior to looming tax increases," says Bob Filek, partner with PricewaterhouseCoopers' Transaction Services.
U.S. M&A activity was down three percent compared with the same period in 2009. The number of closed deals in the first half of 2010 represents the lowest deal volume this decade, according to PwC. For the first five months of 2010, there were 2,969 closed deals representing $317 billion, compared with 3,065 deals valued at $323 billion in the same period of 2009.
While deal value and volume are down, willing lenders and open credits markets are available for transactions, according to PwC. "Banks and institutions are providing capital to execute deals," says Greg Peterson, partner with PricewaterhouseCoopers' Transaction Services. "They are lending more conservatively, but credit is available from a variety of sources and in a variety of types -- including traditional leveraged loans."
Corporate buyers continue to employ strategic deal making, pursing attractively valued companies and seeking out 'mergers of productivity' as a means to capture benefits of scale and cost savings, maintains Filek. "Companies are taking advantage of depressed valuations -- looking for deals to grow and diversify at discounted prices. Even with the uncertainty in Europe, a hesitant consumer and volatile markets, it's still an attractive time to buy."
The median deal size in the first half was $107 million, indicating that smaller, middle market deals have become the new 'normal.' "While there is still ambition to complete mega deals, the 'hit rate' will be low. The sweet spot for deals will be one to five billion dollars and below, with a mega deal or two sprinkled in," says PwC's Peterson.
PwC expects divestitures, carve-outs and spin-offs to continue to contribute to deal activity as companies separate certain assets and operations no longer seen as core to the business. The likely candidates to acquire these assets are private equity players who have strong relationships with large corporations that may be interested in selling certain assets. Business units within the industrial products and technology sectors are among the industries where PwC expects to see increased divestiture activity.
"Private equity players will also remain active in the distressed area, using their debt, hedge and distressed funds to find deals in untraditional ways," continues Peterson. "While there are concerns about stricter regulation for certain alternative investment classes, private equity is a resilient and innovative business run by sophisticated investors who will still get deals done, regardless of what transpires in Washington."
The current private equity overhang at nearly $850 billion (three and a half times the overhang in 2000) represents 54% of all capital commitments made between 2004 and 2009. Over 85% of the $850 billion is in funds larger than $1 billion, including 48% in funds larger than $5 billion, according to Cambridge Associates.
Declining values of the Euro and Pound are also providing a strong backdrop for cross-border deals, particularly in Europe. "Typically, during U.S. downturns, European companies take advantage of a poor U.S. economy, but this time, foreign buyers have to deal with issues at home, including a challenging financing market, reduced demand and declining currency values," according to PwC's Filek. "As a result, we expect the inverse to occur. U.S. corporates are going to see good opportunities to acquire high quality franchises and brands in Europe."
Sectors ripe for consolidation include:
-- Aerospace & Defense - Activity in the security, surveillance and
homeland security sectors are expected to continue as suppliers seek
to diversify their offerings and seek growth areas away from
traditional defense budgets. Look for organizational conflict of
interest concerns to drive some activity, with A&D companies
evaluating options to exit such activities through a sales process.
-- Automotive -- With crashing 2009 assembly volumes in the rear-view
mirror, companies with strong balance sheets and access to capital are
poised to re-enter the deal market. Over the next three to five
years, M&A will be driven by new technologies, regulations and
consumer requirements. Tier one suppliers will work to realign their
product portfolios to take advantage of the restructured industry.
Developed markets will focus on fuel economy, hybrid and electric
vehicles and infotainment and communications in vehicles, while
developing markets will focus on delivering low cost vehicles and
acquiring technologies.
-- Entertainment, Media & Communications -- Private equity interest
remains strong with new investment in and through platform companies.
High-profile acquisitions over the past several years, as well as
numerous middle-market acquisitions, have led private equity's
interest and influence via platform investments to expand across the
E&M landscape. As private equity investors continue to assess the
cyclical and structural issues within certain E&M subsectors, PwC
expects that interest to permeate even further via bolt-on
acquisitions as well as new platform company investments.
Additionally, more traditional, well-capitalized corporates in this
space appear to be stabilizing and interested in potential M&A
activity.
-- Financial Services -- Until the impact of U.S. financial regulation is
fully realized, uncertainty will be cause for continued stagnation of
deals in the sector, other than some continuing interest in FDIC
supported takeovers. However, opportunities exist for companies to
divest non-core assets and consider capital raising alternatives such
as debt or equity raises. Consolidation in the property and casualty
insurance is still expected in light of continued soft premium pricing
and desire to maximize scale, while life insurance consolidations will
likely continue to be a less active space given returning investment
portfolio valuations and focus on product redesign.
-- Healthcare -- As the full impact of U.S. healthcare reform becomes
better understood, look for increased industry M&A and joint venture
activity. Consolidation will accelerate in the services and health
insurance/managed care sectors, driven by the need to reduce costs,
increase productivity and develop more integrated business models.
Technology will play an even larger role; and leaders will embrace
strategies and innovations that will lead to more collaboration across
all health industry sectors.
-- Oil & Gas -- Oil & gas commodity price differential will drive
companies to increase their oil positions through acquisitions.
Equipment and service companies will expand their product and
geographic footprint through transactions. The offshore drilling
moratorium will be an obstacle for those highly levered to Gulf of
Mexico E&P projects but will likely not dampen the growing level of
transactions in the sector.
-- Power & Utilities -- Despite uncertainty surrounding energy policy and
regulatory changes, M&A activity in the sector has been a pleasant
surprise, as significant regulated and merchant company transactions
have been announced in the first two quarters of 2010. PwC expects
this trend to continue, with a cautious eye towards regulatory
approvals of the announced transactions. IOUs continue to shed
non-core assets and M&A activity remains strong in the renewable
space. Expect to see continued sales of merchant power plants,
particularly driven by the current and projected commodity prices.
-- Retail/Consumer Products -- Watch for the strongest sectors to lead
the way in accelerated activity focused on growth. Food and household
products companies will look to expand portfolios and enter emerging
markets as a way to boost revenue growth. Retailers faced with a
lackluster U.S. consumer will be focused on business models that make
sense for them in emerging markets. European specialty companies
depressed by the recent downturn could be attractive to opportunistic
U.S. buyers.
-- Technology -- Record profits and favorable revisions in investors'
expectations will drive M&A as a means of accelerating innovation
cycles. The 'new R&D' will continue to drive mid-market transactions.
PwC expects software incumbents to round-out offerings or acquire
industry-specific applications and as major hardware players expand
into end-to-end solutions. Look for semiconductor deals to come to
the fore as the long-awaited cyclical rebound begins to take hold.
Consumer technology and Internet majors will continue to work their
way along the value chain to capture market and mindshare as mobile
computing, entertainment and communications markets converge on
intelligent and user-friendly devices.
According to PwC, the wild card in the second half will be just how much incentive looming tax increases give buyers to sell. "The economics could be compelling enough to drive a rush to exit by December 31, which could mean a busy holiday season for deal makers," says Filek.
*The accuracy of our previous forecasts does not guarantee future accuracy.
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Wednesday, June 23, 2010
While Large Cap Transactions Remain Challenged for Second Half, Looming Tax Increases Will Light Fire Under Middle Market Merger & Acquisition Activity, According to PricewaterhouseCoopers
Tuesday, July 7, 2009
Wells Fargo and Wachovia Investment Banking and Capital Markets Businesses Branded as Wells Fargo Securities
(BUSINESS WIRE)--Wells Fargo & Company (NYSE:WFC) today announced that its investment banking and capital markets businesses formerly operating under the Wachovia Securities and certain Wells Fargo brands will now operate under the brand Wells Fargo Securities.
The new Wells Fargo Securities brand will bring together the firm’s market-leading businesses in debt and equity underwriting, mergers and acquisitions, loan syndications, debt and equity sales and trading, tax-exempt products, research and economics, and certain hedging products such as equity derivatives.
As part of the brand change, Barrington Associates, Wells Fargo’s middle market mergers and acquisitions advisory division, will begin to operate exclusively under the Wells Fargo Securities brand. Eastdil Secured, Wells Fargo’s provider of real estate capital markets services, will continue to operate under its existing name and will offer securities products through Wells Fargo Securities.
“We have an enormous opportunity to become one of the top customer-focused investment banks in the country by focusing on the basics and on those businesses that directly serve our customers,” said Wells Fargo & Company’s President and Chief Executive Officer John Stumpf. “Clearly one of the great benefits of the Wachovia merger was the strong investment banking and capital markets platform that we gained. We plan to build on those strengths to grow and invest in the business as we continue to satisfy all of our customers’ financial needs.”
Wells Fargo Securities combines strong relationships and industry knowledge with superior capital markets and advisory capabilities. The brand includes two business lines – Investment Banking and Capital Markets, co-led by Rob Engel and Jonathan Weiss, and the Securities and Investment Group, led by John Shrewsberry – which serve both middle market and large U.S. corporate and institutional clients. Both businesses report to Tim Sloan, head of Wholesale Banking’s Commercial, Real Estate and Specialized Financial Services group.
“The Wells Fargo Securities brand brings together Wachovia’s market-leading investment banking businesses and Wells Fargo’s niche expertise to form a powerful investment banking and capital markets platform,” said Sloan. “We’re combining the top-rated customer service of both Wachovia and Wells Fargo with the strength of one of the nation’s largest banks and a set of investment banking products and services that are focused exclusively on the needs of our customers.”
Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,400 stores, over 12,000 ATMs, more than 900 corporate and commercial banking offices, and the internet (wellsfargo.com) across North America and internationally.
Wells Fargo Securities is the trade name for certain capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, member FINRA and SIPC; Wachovia Bank, National Association; and Wachovia Securities International Limited, a U.K. investment firm authorized and regulated by the Financial Services Authority.
As previously announced, retail brokerage products and services formerly marketed as Wachovia Securities are now offered through Wells Fargo Advisors.
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Thursday, December 11, 2008
North Carolina Judge Rules in Favor of Wells Fargo and Wachovia on Voting Preferred Shares
(BUSINESS WIRE)--On December 5, 2008, a North Carolina Business Court judge ruled in favor of Wachovia Corporation (NYSE:WB) and Wells Fargo & Company (NYSE:WFC) in a case brought to enjoin Wells Fargo from voting shares of voting preferred stock issued to Wells Fargo by Wachovia. The shares were issued to Wells Fargo on October 20, 2008 pursuant to a share exchange agreement entered in connection with the merger agreement between Wells Fargo and Wachovia and gave Wells Fargo 39.9% of the voting power of Wachovia. The Court’s ruling keeps the Wachovia shareholder vote on schedule for Tuesday, December 23, 2008. As previously disclosed, Wells Fargo will vote its shares of Wachovia voting preferred stock in favor of approval of the merger. The Court specifically found that Wachovia's board "acted in good faith, on an informed basis, and in the best interests of the Company in approving the Merger Agreement."
The Court also considered a provision allowing Wells Fargo’s preferred shares to remain outstanding in the event the merger remains unconsummated for 18 months following the shareholder vote. In granting preliminary injunctive relief relating to this provision, the Court noted that granting Plaintiff's request for injunctive relief on this provision would cause little if any harm to Wells Fargo or Wachovia because "[t]his is not a provision that affects the value or structure of the [Merger Agreement.]"
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Saturday, December 6, 2008
Merrill Lynch Stockholders Approve Transaction with Bank of America
(BUSINESS WIRE)--Merrill Lynch & Co., Inc. (NYSE: MER) announced that Bank of America’s acquisition of Merrill Lynch was approved today at its special stockholders meeting along with two other related proposals. Under the terms of the transaction, which was announced on September 15, 2008, Merrill Lynch stockholders will receive 0.8595 of a share of Bank of America common stock for each share of Merrill Lynch common stock held immediately prior to the merger and Merrill Lynch & Co., Inc. will become a wholly-owned subsidiary of Bank of America Corporation. The acquisition is expected to close by the end of the year, pending the receipt of regulatory approvals and the satisfaction of other customary closing conditions.
"By approving this transaction, Merrill Lynch stockholders expressed confidence that the combination of our firm and Bank of America will create one of the most powerful financial institutions in the world, with unmatched capabilities and service," said, John Thain, chairman and CEO of Merrill Lynch. "This combination will create great value for our stockholders and clients around the world."
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Monday, October 13, 2008
Federal Reserve Board Approves Wells Fargo’s Application to Merge with Wachovia Corporation
(BUSINESS WIRE)--Wells Fargo & Company (NYSE:WFC) said today that the Board of Governors of the Federal Reserve has approved its application to merge with Wachovia Corporation (NYSE: WB) including all its subsidiaries, and the share exchange agreement previously entered into between Wachovia and Wells Fargo.
The approval is an important step forward in the transaction, which still requires the approval of Wachovia shareholders. The merger is on schedule to be completed by the end of this year.
Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about Wells Fargo and Wachovia and the proposed transaction between the companies. There are several factors – many beyond Wells Fargo’s control – that could cause actual results to differ significantly from expectations described in the forward-looking statements. Among these factors are the receipt of necessary regulatory approvals and the approval of Wachovia shareholders. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
For a discussion of factors that may cause actual results to differ from expectations, refer to each company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and Annual Report on Form 10-K for the year ended December 31, 2007, including information incorporated into each company’s 10-K from their respective 2007 annual reports, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.
MORE INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The proposed merger will be submitted to Wachovia Corporation shareholders for their consideration. Wells Fargo will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a proxy statement of Wachovia Corporation that also constitutes a prospectus of Wells Fargo. Wachovia Corporation will mail the proxy statement-prospectus to its shareholders. Wachovia shareholders and other investors are urged to read the final proxy statement-prospectus when it becomes available because it will describe the proposed merger and contain other important information. You may obtain copies of all documents filed with the SEC regarding the proposed merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain free copies of these documents by contacting Wells Fargo or Wachovia, as follows:
Wells Fargo & Company, Attention Corporate Secretary, MAC N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479, (612) 667-0087.
Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, North Carolina 28288, (704) 374-6782
Wells Fargo and Wachovia and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Wachovia Corporation shareholders in connection with the proposed merger. Information about Wells Fargo’s directors and executive officers and their ownership of Wells Fargo common stock is contained in the definitive proxy statement for Wells Fargo’s 2008 annual meeting of stockholders, as filed by Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about Wachovia’s directors and executive officers and their ownership of Wachovia common stock is contained in the definitive proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed by Wachovia with the SEC on Schedule 14A on March 10, 2008. You may obtain a free copy of these documents by contacting Wells Fargo or Wachovia at the contact information provided above. The proxy statement-prospectus for the proposed merger will provide more information about participants in the solicitation of proxies from Wachovia Corporation shareholders.
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Friday, October 10, 2008
Wells Fargo’s Merger With Wachovia to Proceed as Whole Company Transaction With All of Wachovia’s Banking Operations
(BUSINESS WIRE)--Wells Fargo & Company (NYSE:WFC) said today (October 9, 2008) that it and Citigroup, Inc. (NYSE:C) have terminated discussions concerning a possible sale of certain banking assets of Wachovia Corporation (NYSE:WB) and reaffirmed that it is proceeding with its merger with Wachovia Corporation as a whole company transaction with all of Wachovia’s banking and other operations, requiring no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Wells Fargo has submitted its application to the Federal Reserve Board seeking expedited approval of the merger and the share exchange agreement previously entered into between Wachovia and Wells Fargo. Under the share exchange agreement, Wachovia is issuing Wells Fargo preferred stock that votes as a single class with Wachovia’s common stock representing 39.9 percent of Wachovia’s voting power. The acquisition of the non-banking related operations of Wachovia and the share exchange agreement have received early termination from the Federal Trade Commission (FTC), under the Hart-Scott-Rodino Act.
As previously announced, under the definitive agreement between the two companies, Wells Fargo will acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. In the transaction, Wells Fargo will acquire all of Wachovia Corporation and all its businesses and obligations, including its preferred equity and indebtedness, and all its banking deposits.
Wells Fargo Chairman Dick Kovacevich said the merger 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. We’re combining the industry’s number one ranking customer service culture of Wachovia with the industry’s number one sales and cross-selling culture of Wells Fargo. The best in service and the best in sales, an unbeatable combination. We also bring to this merger our 157 years of experience in financial services and the unparalleled convenience we can offer Wachovia customers through one of the most extensive financial services distributions systems in North America. We have the highest regard for the quality and commitment and caring of Wachovia team members. We believe their demonstrated commitment to outstanding customer service and their highest standards of community leadership are identical to our own values.”
Kovacevich reiterated that the two companies have a firm, binding merger agreement, are confident the merger will be completed, that it will keep Wachovia intact and create significant value for Wachovia and Wells Fargo shareholders. Wells Fargo will record Wachovia’s credit-impaired assets at fair value. “Credit teams at Wells Fargo have had an opportunity to work with their counterparts at Wachovia,” said Kovacevich. “Much of Wachovia’s portfolio involves businesses where Wells Fargo has a significant market presence, operating history and expertise. We have had experience with such businesses through a variety of credit cycles. Given our broad based operating expertise, and specific understanding of these individual businesses we believe we have adequately evaluated the risks inherent in the portfolios as of the time of this merger agreement.”
In addition, Kovacevich said Wells Fargo is pleased that Citigroup announced that it is no longer seeking that the Wells Fargo-Wachovia merger be enjoined. “We believe that that is the correct and right decision for our Country and our citizens and the health of our already stressed financial system, as well as our and Wachovia’s respective shareholders and stakeholders,” said Kovacevich.
“We are delighted to stride ahead with Wells Fargo in creating a coast-to-coast financial institution -- one of the strongest financial firms in the world,” said Wachovia Corporation President and CEO Robert K. Steel.
The combined company will have $1.42 trillion in assets, $787 billion in deposits, 48 million customers, $258 billion assets under management in mutual funds, 10,761 stores, 12,227 ATMs and 280,000 team members. The merger will create the nation’s premier coast-to-coast community banking presence with community banks in 39 states and the District of Columbia. Wachovia will add the following banking stores, ATMs and deposits to the combined company (Stores/ATMs as of 9/30/08; U.S. Deposits 6/30/08):
Banking stores
ATMs
Deposits (billions)
Alabama 141 178 $ 8.8
Arizona 21 44 2.7
California 193 255 37.1
Colorado 34 35 4.8
Connecticut 74 105 7.4
Delaware 20 37 3.4
Florida 712 963 71.1
Georgia 277 653 27.8
Illinois 8 9 .9
Kansas 8 8 1.2
Maryland 80 116 7.5
Mississippi 13 20 .5
North Carolina 325 649 96.2
Pennsylvania 294 457 30.9
Nevada 6 26 19.0
New Jersey 312 468 28.4
New York 84 183 15.1
South Carolina 143 275 11.7
Tennessee 17 20 .5
Texas 241 290 14.1
Virginia 290 443 25.9
Washington D.C. 32 66 6.9
Total 3325 5300 $ 422
The combined company will be #1 in deposit market share1 in 17 of its 39 Community Banking states: Alaska, Arizona, California, Colorado, Florida, Georgia, Idaho, Minnesota, Iowa, Montana, Nebraska, New Jersey, New Mexico, North Carolina, South Dakota, Texas, and Virginia. Ninety-three percent of its deposits will be in states in which it ranks #1, 2 or 3 and the combined company will rank #1 in ten of the nation’s 20 largest Metropolitan Statistical Areas (MSAs) in deposit market share.1
1 excludes deposits greater than $500 million in a single banking store
Wells Fargo also is the nation’s:
* #1 small business lender,
* #1 agricultural lender,
* #1 commercial real estate broker,
* #2 largest mortgage originator,
* #2 largest mortgage servicer,
* #2 largest debit card issuer,
* #1 financial services provider to middle market businesses in the western U.S. and a national presence in commercial banking (29 states),
* largest bank-owned U.S. insurance brokerage
Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about Wells Fargo and Wachovia and the proposed transaction between the companies. There are several factors – many beyond Wells Fargo’s control – that could cause actual results to differ significantly from expectations described in the forward-looking statements. Among these factors are the receipt of necessary regulatory approvals and the approval of Wachovia shareholders. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
For a discussion of factors that may cause actual results to differ from expectations, refer to each company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and Annual Report on Form 10-K for the year ended December 31, 2007, including information incorporated into each company’s 10-K from their respective 2007 annual reports, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.
MORE INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The proposed merger will be submitted to Wachovia Corporation shareholders for their consideration. Wells Fargo will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a proxy statement of Wachovia Corporation that also constitutes a prospectus of Wells Fargo. Wachovia Corporation will mail the proxy statement-prospectus to its shareholders. Wachovia shareholders and other investors are urged to read the final proxy statement-prospectus when it becomes available because it will describe the proposed merger and contain other important information. You may obtain copies of all documents filed with the SEC regarding the proposed merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain free copies of these documents by contacting Wells Fargo or Wachovia, as follows:
Wells Fargo & Company, Attention Corporate Secretary, MAC N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479, (612) 667-0087.
Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, North Carolina 28288, (704) 374-6782
Wells Fargo and Wachovia and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Wachovia Corporation shareholders in connection with the proposed merger. Information about Wells Fargo’s directors and executive officers and their ownership of Wells Fargo common stock is contained in the definitive proxy statement for Wells Fargo’s 2008 annual meeting of stockholders, as filed by Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about Wachovia’s directors and executive officers and their ownership of Wachovia common stock is contained in the definitive proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed by Wachovia with the SEC on Schedule 14A on March 10, 2008. You may obtain a free copy of these documents by contacting Wells Fargo or Wachovia at the contact information provided above. The proxy statement-prospectus for the proposed merger will provide more information about participants in the solicitation of proxies from Wachovia Corporation shareholders.
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Monday, October 6, 2008
Wells Fargo Statement on Appellate Court Decision to Vacate Temporary Restraining Order
BUSINESS WIRE --Wells Fargo & Company (NYSE:WFC) issued the following statement this evening (October 5, 2008) regarding Citigroup’s claimed exclusivity agreement with Wachovia Corporation:
“The appellate court has entered an order vacating Judge Ramos’s order of yesterday. We are pleased that the unfounded order entered yesterday has been vacated. Wells Fargo will continue working toward the completion of its firm, binding merger agreement with Wachovia Corporation.”
Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about Wells Fargo and Wachovia and the proposed transaction between the companies. There are several factors – many beyond Wells Fargo’s control – that could cause actual results to differ significantly from expectations described in the forward-looking statements. Among these factors are the receipt of necessary regulatory approvals and the approval of Wachovia shareholders. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
For a discussion of factors that may cause actual results to differ from expectations, refer to each company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and Annual Report on Form 10-K for the year ended December 31, 2007, including information incorporated into each company’s 10-K from their respective 2007 annual reports, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.
MORE INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The proposed merger will be submitted to Wachovia Corporation shareholders for their consideration. Wells Fargo will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a proxy statement of Wachovia Corporation that also constitutes a prospectus of Wells Fargo. Wachovia Corporation will mail the proxy statement-prospectus to its shareholders. Wachovia shareholders and other investors are urged to read the final proxy statement-prospectus when it becomes available because it will describe the proposed merger and contain other important information. You may obtain copies of all documents filed with the SEC regarding the proposed merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain free copies of these documents by contacting Wells Fargo or Wachovia, as follows:
Wells Fargo & Company, Attention Corporate Secretary, MAC N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479, (612) 667-0087.
Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, North Carolina 28288, (704) 374-6782.
Wells Fargo and Wachovia and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Wachovia Corporation shareholders in connection with the proposed merger. Information about Wells Fargo’s directors and executive officers and their ownership of Wells Fargo common stock is contained in the definitive proxy statement for Wells Fargo’s 2008 annual meeting of stockholders, as filed by Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about Wachovia’s directors and executive officers and their ownership of Wachovia common stock is contained in the definitive proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed by Wachovia with the SEC on Schedule 14A on March 10, 2008. You may obtain a free copy of these documents by contacting Wells Fargo or Wachovia at the contact information provided above. The proxy statement-prospectus for the proposed merger will provide more information about participants in the solicitation of proxies from Wachovia Corporation shareholders.
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Saturday, October 4, 2008
Wells Fargo, Wachovia Agree to Merge
BUSINESS WIRE)--Wells Fargo & Company (NYSE:WFC) and Wachovia Corporation (NYSE:WB) said today (October 3, 2008) they have signed a definitive agreement for the merger of the two companies including all of Wachovia’s banking operations in a whole company transaction requiring no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Under the agreement, Wells Fargo will acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. In the transaction, Wells Fargo will acquire all of Wachovia Corporation and all its businesses and obligations, including its preferred equity and indebtedness, and all its banking deposits.
Under terms of the agreement, which has been approved unanimously by the boards of both companies, 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. Wachovia has almost 2.2 billion common shares outstanding. The agreement requires the approval of Wachovia shareholders and customary approvals of regulators.
Wells Fargo will record Wachovia’s credit-impaired assets at fair value. The acquisition is expected to exceed Wells Fargo’s internal rate of return goal and add to Wells Fargo’s earnings per share in the first year of operations, excluding integration costs, write-downs, transaction charges, and credit reserve build. Wells Fargo expects to incur merger and integration charges of approximately $10 billion. To maintain its strong capital position, Wells Fargo intends to issue up to $20 billion of new Wells Fargo securities, primarily common stock.
“We at Wachovia have great admiration and respect for the people and businesses at Wells Fargo and we are extremely pleased to join forces with this outstanding company,” said Robert K. Steel, President and CEO of Wachovia Corp. “Today’s announcement creates one of the strongest financial firms in the world and is great for all Wachovia constituencies: our shareholders, customers, colleagues and communities. This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support. The market presence and composition of our businesses, along with our service-oriented cultures, are extraordinarily complementary and this combination creates great potential for sustained stability and growth.”
“This agreement represents a compelling value for Wachovia shareholders,” said Wells Fargo Chairman Dick Kovacevich. “It provides superior value compared to the previous offer to acquire only the banking operations of the company and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world’s great financial services companies. We are combining the industry’s number one ranking customer service culture of Wachovia with the industry’s number one sales and cross-selling culture of Wells Fargo. The best in service and the best in sales, an unbeatable combination. Wachovia shareholders also will benefit from holding the stock of a strong financial institution, the U.S. bank with the highest credit ratings and with a long history of increasing dividends on its common stock. Wachovia’s brokerage and asset management businesses, which would have been left behind in the prior proposal, are tightly interwoven with Wachovia’s core banking business – and this agreement avoids the complexity and unavoidable loss of value in trying to separate them, which would have disrupted Wachovia’s team members and customers. We also bring to this merger agreement our 157 years of experience in financial services and the unparalleled convenience we can offer Wachovia customers through one of the most extensive financial services distributions systems in North America. We have the highest regard for the quality and commitment and caring of Wachovia team members. We believe their demonstrated commitment to outstanding customer service and their highest standards of community leadership are identical to our own values. And, of course, this agreement won’t require even a penny from the FDIC.”
The combined company will have a strong presence in Charlotte, which will be the headquarters for the combined company’s East Coast retail and commercial and corporate banking business. 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 & Company Board when the transaction is completed.
Kovacevich said, “This agreement is an outstanding opportunity for Wachovia common and preferred shareholders and debt holders, team members and customers, for the Charlotte and St. Louis communities and indeed all of the communities that Wachovia serves, and for the U.S. government and our banking system. It makes compelling business and strategic sense and 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.”
“We know this has been a time of great uncertainty for Wachovia team members and many of its customers as their company has gone through a very painful and challenging time of unprecedented change in our industry,” said Wells Fargo President and CEO John Stumpf. “We want to assure them we’ll do everything we can to make the integration of our operations as smooth as possible. An important measure of success for this integration will be our ability to retain as many of the talented Wachovia team members as possible so they can continue to provide outstanding service and financial advice to their customers and continue their careers with Wells Fargo.”
The combined company will be one of North America’s most extensive financial services distribution networks:
6/30/08
Wells Fargo
Wachovia
Combined
Assets $609 billion $812 billion $1.42 trillion
Deposits $339 billion $448 billion $787 billion
Customers 28 million 20 million
48 million1
Assets under Mgt.
(Mutual Funds) $151 billion $107 billion $258 billion
Stores 5,941 4,820 10,761
ATMs 6,950 5,277 12,227
Team Members 160,000 120,000 280,000
1 unadjusted for customer overlap
Wells Fargo’s Chief Financial Officer Howard Atkins said Wells Fargo used conservative assumptions in evaluating this opportunity. "As always, we only consider acquisitions that add to earnings per share no later than the third year after purchase and earn an internal rate of return of at least 15 percent,” said Atkins. “This acquisition comfortably exceeds all our financial requirements. This is a unique opportunity to expand both our Community Banking and Wholesale Banking presence in current markets and enter some new markets by acquiring another full service financial services retail banking company with a strong culture of customer service and community involvement very similar to ours.”
Wells Fargo and Wachovia will create the nation’s premier coast-to-coast community banking presence. The combined company will have community banks in 39 states and the District of Columbia. The acquisition will establish a Wells Fargo Community Banking presence for the first time in Alabama, Connecticut, Delaware, Florida, Georgia, Kansas, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and Washington, D.C. Wells Fargo already has a Community Banking presence in Alaska, Arizona, Arkansas (pending), California, Colorado, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming.
The combined company will be #1 in deposit market share2 in 17 of its 39 Community Banking states: Alaska, Arizona, California, Colorado, Florida, Georgia, Idaho, Minnesota, Iowa, Montana, Nebraska, New Jersey, New Mexico, North Carolina, South Dakota, Texas, and Virginia. Ninety-three percent of its deposits will be in states in which it ranks #1, 2 or 3 and the combined company will rank #1 in ten of the nation’s 20 largest Metropolitan Statistical Areas (MSAs) in deposit market share.2
2 excludes deposits greater than $500 million in a single banking store
Wells Fargo also is the nation’s:
* #1 small business lender,
* #1 agricultural lender,
* #1 commercial real estate broker,
* #2 largest mortgage originator,
* #2 largest mortgage servicer,
* #2 largest debit card issuer,
* #1 financial services provider to middle market businesses in the western U.S. and a national presence in commercial banking (29 states),
* largest bank-owned U.S. insurance brokerage
In connection with the agreement, Wachovia and Wells Fargo entered into a share exchange agreement under which Wachovia is issuing Wells Fargo preferred stock that votes as a single class with Wachovia’s common stock representing 39.9 percent of Wachovia’s voting power.
Wells Fargo was advised on the transaction by Wachtell, Lipton, Rosen & Katz and JPMorgan Securities, Inc. was the exclusive financial advisor to Wells Fargo. Wachovia was advised on the transaction by Sullivan & Cromwell LLP, Goldman Sachs & Co. and Perella Weinberg Partners.
Wells Fargo & Company is a diversified financial services company with $609 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements about Wells Fargo and Wachovia and the proposed transaction between the companies. There are several factors – many beyond Wells Fargo’s control – that could cause actual results to differ significantly from expectations described in the forward-looking statements. Among these factors are the receipt of necessary regulatory approvals and the approval of Wachovia shareholders. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
For a discussion of factors that may cause actual results to differ from expectations, refer to each company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and Annual Report on Form 10-K for the year ended December 31, 2007, including information incorporated into each company’s 10-K from their respective 2007 annual reports, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.
MORE INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
The proposed merger will be submitted to Wachovia Corporation shareholders for their consideration. Wells Fargo will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a proxy statement of Wachovia Corporation that also constitutes a prospectus of Wells Fargo. Wachovia Corporation will mail the proxy statement-prospectus to its shareholders. Wachovia shareholders and other investors are urged to read the final proxy statement-prospectus when it becomes available because it will describe the proposed merger and contain other important information. You may obtain copies of all documents filed with the SEC regarding the proposed merger, free of charge, at the SEC’s website (www.sec.gov). You may also obtain free copies of these documents by contacting Wells Fargo or Wachovia, as follows:
Wells Fargo & Company, Attention Corporate Secretary, MAC N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479, (612) 667-0087.
Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South College Street, Charlotte, North Carolina 28288, (704) 374-6782
Wells Fargo and Wachovia and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Wachovia Corporation shareholders in connection with the proposed merger. Information about Wells Fargo’s directors and executive officers and their ownership of Wells Fargo common stock is contained in the definitive proxy statement for Wells Fargo’s 2008 annual meeting of stockholders, as filed by Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about Wachovia’s directors and executive officers and their ownership of Wachovia common stock is contained in the definitive proxy statement for Wachovia’s 2008 annual meeting of shareholders, as filed by Wachovia with the SEC on Schedule 14A on March 10, 2008. You may obtain a free copy of these documents by contacting Wells Fargo or Wachovia at the contact information provided above. The proxy statement-prospectus for the proposed merger will provide more information about participants in the solicitation of proxies from Wachovia Corporation shareholders.
CONFERENCE CALL UPDATE
Wells Fargo will host a conference call Friday, October 3, 2008, at 6:30 a.m. (Pacific Time) to review the acquisition. Investors can call 877-425-9480 (domestic) and (210) 689-8848 (international) with the access code 299254, or listen via live audio webcast. The live audio webcast and presentation visuals will be available on http://www.wellsfargo.com/invest_relations/presents. A replay of the conference call will be available through October 10, 2008 at (877) 660-6853 (domestic) and (201) 612-7415 (international). Enter account 286 and Conference ID 299254. The replay also will be available online.
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Tuesday, September 9, 2008
Algon Group Predicts 'Perfect Storm' in Homebuilding Industry Will Lead to Significant Bank Failures in Next 24-36 Months
At Alabama Bankers Convention, Algon Group founder Troy Taylor predicts substantial bank losses; in July Taylor tells American Bankruptcy Institute - Southeast Members that 25-50% of Atlanta, GA banks may fail or merge by 2011.
PRNewswire/ -- Citing excess inventory and the substantial erosion of housing asset value - particularly in certain Southeastern areas - Algon Group founder and president Troy Taylor predicts that the inability of homebuilders to satisfy loans will lead to increasing bank failures in these markets over the next 24-36 months.
Addressing the Alabama Bankers Convention in June 2008, Taylor said that based on what Algon Group clients and other homebuilders were experiencing in Florida and Georgia, he expects banks to suffer substantial losses as builders default on loans. In July 2008, Taylor told Southeastern members of the American Bankruptcy Institute that he predicts 25-50% of Atlanta-based banks will fail or merge by 2011. Taylor said that the ongoing problems Algon Group has seen over the past two months have only furthered his belief that the worst is yet to come.
Taylor and Algon's Managing Director Larry Comegys - a housing industry veteran and former President of Pulte-Florida and Meritage Homes-Florida - have since January 2008 advised homebuilders, banks, hedge funds, and trustees in eight separate real estate-related engagements. Taylor attributes the housing industry crisis to a "perfect storm" created by the confluence of subprime mortgages, real estate speculation, new home prices outpacing income, and overbuilding. As an example, he points to select Florida counties where the supply of vacant developed lots increased from 12 months in the second quarter (Q2) of 2005 to 80 months in Q2 2008, and the inventory of future lots increased from 64 months in Q2 2005 to 391 months in the fourth quarter of 2007. During this same period, the average price of new homes in the sample areas fell by 27 percent.
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