Wells Fargo Deal: Better for Wachovia Shareholders
Under the Citigroup takeover, Wachovia shareholders would have gotten a pretty raw deal. The Wells Fargo acquisition (read the full text here) is an improvement: Each share of Wachovia common stock will be exchanged for 0.1991 shares of Wells Fargo common stock, which comes to a value of $7 per share (based on Wells Fargo's closing stock price of $35.16 a share on Thursday). The Citi deal would have paid $1 per share.
Here's what Wells Fargo's chairman, Richard Kovacevich, said in a statement: "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."
According to the Winston-Salem Journal, some shareholders are considering individual or class-action lawsuits based on statements made by Wachovia executives this year. One such is former CEO Ken Thompson's decree in January that Wachovia was not going to cut its dividend. Since then, the bank has cut its dividend twice, from 64 cents in February to 5 cents in July. One investor in the story, who has lost roughly $150,000 on Wachovia shares over the past year, said: "I bought 2,000 shares of Wachovia stock at $36 a share based on that statement because it helped restore my confidence in a Wachovia rebound."
Tags: Citigroup | stocks | Wall Street | stock market | banking | Wachovia | Wells Fargo
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Reader Comments
Bad Business As A Citi Shareholder
As a Citi shareholder, and having increased my position substantially this week as a result of this deal, I can only say that if the Wells/Wachovia deal goes through I will immediately close all of my accounts at both banks and will never do business with either of them again.
I understand the concept of a "better deal" and I understand being under presure of asset deterioration and the frustration of shareholders. All that said, TAKING THIS DEAL IS WRONG! You can try to justify it 1,000 times, from all kinds of different perspectives, but we all know that a deal is suppose to be a deal, and when two large organization try to work between the intent of an agreement and the written word, I HAVE NO RESPECT FOR EITHER OF THEM.
If they were a small business, they would be out of business as no other small business would work with someone who wasn't worth their word.
All that said, I feel for the Wachovia shareholders as they have lost tremendously...... But retrading a deal is unforgivable...... Maybe the rest of the market will feel the same and stop engaging in swap or counterparty agreements with Wells / Wachovia.
Losses on stocks due to deals
All of wall street knows there is no deal until there is a vote! Shareholders always have the right to say no!!
Wells Fargo & Wachovia
With the Wells Fargo & Wachovia merger Wells fargo is taking all of Wachovia and no goverment aid. With Citigroup they were taking only parts of Wachovia and the government was going to bail them out. That is the only reason Citigroup wanted Wachovia for the bail out.
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