Wells Fargo acquiring Wachovia for $15.1 billion

New York: In an abrupt change of course, Wachovia said on Friday it agreed to be acquired by Wells Fargo & Co in a $15.1 billion all-stock deal, trumping rival suitor Citigroup's plan to acquire Wachovia's banking operations.

A key difference is 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.

"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement.

The Wachovia-Wells deal, announced on Friday, comes in a turbulent time for banks and financial firms as they grapple with the ongoing credit crisis, which led to the bankruptcy of Lehman Brothers Holdings and the failure of Washington Mutual.

All-stock plan

Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Wachovia stock they own, valuing Wachovia at about $7 per share.

This is a nearly 80 per cent 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.

The board approved Wells Fargo's offer late Thursday. The deal is still subject to Wachovia shareholder and other regulatory approvals. Wells Fargo said it expects the deal to close by year-end.

"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 ... ," said Wells Fargo Chairman Dick Kovacevich.