Citi Left At The Altar - Wells Fargo Buys Wachovia

SAN FRANCISCO and CHARLOTTE, October 3, 2008 – Wells Fargo & Company
(NYSE:WFC) and Wachovia Corporation (NYSE:WB) said today 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, writedowns,
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 crossselling
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.”