Wells Fargo Surprise Buyout of Wachovia For $15.1 Billion, No Government Assistance

Wells Fargo has paid $15.1 billion for Wachovia Corp. The surprise announcement on Friday wipes out the planned Citigroup Inc. sale of the bank.

The key difference of the sale is that Wells Fargo is buying Wachovia without government assistance which Citigroup had planned to do. Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share they had of Wachovia stock. For shareholders this is good news. The plan will bring them about $7 a share. On Thursday the Wachovia shares closed at $3.91. Before the Citigroup announcement was made last Friday those shares were listed at $10. Citigroup had agreed to buy Wachovia's banking operations on Monday for $2.16 billion in a deal assisted by the federal government. The deal had been approved by the boards of both companies but had not yet been approved by Wachovia's shareholders and regulators. Wells Fargo will record merger and integration charges of $10 billion but expects earnings to increase within the first year. They are not using government assistance for the buyout.