Wachovia to skip shareholder vote on merger agreement with Wells Fargo

By Susanna Moon

Chicago, Oct. 10 - Wachovia Corp. said it intends to forgo shareholder approval for its merger agreement and share exchange agreement with Wells Fargo & Co. announced on Oct. 3.

The deal normally would require approval of shareholders under policies of the New York Stock Exchange, but the exchange accepted Wachovia's application of exception, according to a company press release.

The audit committee of the board of directors of Wachovia determined that the delay in securing shareholder approval would seriously jeopardize the financial viability of Wachovia.

In reaching the conclusion, the committee considered various factors, including the extraordinary and highly uncertain economic, financial and political environment, and the experience of other financial institutions, Wachovia said.

Wachovia said it is mailing to shareholders notification of its intention to issue shares without seeking their approval. Ten days after the notice is mailed, and after receiving required regulatory approvals, Wachovia said it will issue certificates for the preferred stock.

As previously reported, Wachovia agreed to be acquired by Wells Fargo in a stock-for-stock deal that doesn't require financial assistance from the Federal Deposit Insurance Corp. or other government agency.

Wells Fargo said it will acquire all of Wachovia including all its businesses and obligations -preferred equity and debt included - and all its banking deposits.

Both financial services companies' boards of directors unanimously approved the deal, which is valued at $7.00 per share, or approximately $15.1 billion.

The merger agreement gives Wachovia shareholders 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock, according to a Wachovia news release. Wells Fargo closed at $35.16 (NYSE: WFC) on Oct. 2.

"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%," Wells Fargo chief financial officer Howard Atkins said in a company statement. "This acquisition comfortably exceeds all our financial requirements."

San Francisco-based Wells Fargo said the combined company's East Coast retail and commercial and corporate banking business will be based in Charlotte, N.C., where Wachovia currently has its headquarters. Wachovia Securities will remain based in St. Louis.

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