Fed Backs Wells’ Merge With Wachovia

Wells Fargo & Co. (WFC) announced Sunday that the Board of Governors of the Federal Reserve approved its application to merge with Wachovia Corp. (WB) “The approval is an important step forward in the transaction, which still requires the approval of Wachovia shareholders,” and should be completed by the end of Q4 2008, Wells said in a press statement Sunday. Wells announced its plans to move forward with the Wachovia merger hours after Citigroup Inc. (C) pulled out of resolution talks Thursday after four days of discussion on splitting Wachovia’s assets. With the competition removed, Wells Fargo said it plans to pursue the purchase of Wachovia’s assets in a whole company transaction and without financial assistance from the Federal Deposit Insurance Corp. Wells Fargo will acquire Wachovia’s outstanding shares of common stock in a stock-for-stock transaction. ()simply an incredible fit that will result in an immensely strong, stable financial services company that will carry on Wachovia()s proud tradition of being one of the very best financial institutions in the world,” said Wells Fargo chairman Dick Kovacevich. Wells Fargo extended its initial offer just days after Wachovia announced its FDIC-encouraged deal with Citi. After much bickering between the banks over which suitor would acquire Wachovia’s banking operations, the dispute came to a pause last week as the banks agreed to suspend courtroom proceedings, and discuss a possible compromise — that is until Thursday evening, when Citi said no more. “The dramatic differences in the parties’ transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement,” Citi said in a statement released Thursday. Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade. Editor’s Note: To contact the reporter on this story, email [email protected].