Wachovia to Acquire SouthTrust for $13.7 Billion
Wachovia Corp. shares slipped after the U.S. banking titan announced its $13.7 billion acquisition of SouthTrust Corp., a pricey deal that will cut into Wachovia's profit.
Terms of the acquisition call for Wachovia, based in Charlotte, N.C., and the fourth-largest U.S. bank in assets, to swap 0.89 of a Wachovia share for each share of SouthTrust, Birmingham, Ala. The deal represented a juicy 20% premium for SouthTrust shareholders before yesterday's decline in Wachovia stock, causing some investors and analysts to question whether Wachovia overpaid.
The acquisition was valued at $14.3 billion when announced. In New York Stock Exchange composite trading at 4 p.m., Wachovia fell 4.2%, or $1.98, to $45.02. SouthTrust shares, which had climbed amid speculation the bank would be sold, surged $4.57, or 13%, to $39.37 in Nasdaq Stock Market trading.
Wachovia said the acquisition is expected to shave 15 cents from the $4.30 a share in earnings that Wall Street analysts had expected from the company in 2005. The acquisition also will cut four cents from 2006 per-share profit expectations. Wachovia said the combination would add two cents to expected per-share earnings in 2007.
Wachovia Chairman and Chief Executive G. Kennedy Thompson said the acquisition, which is expected to close in the fourth quarter pending regulatory approval, gives Wachovia a firm hold on the Southeast, a region with a strong economy. "We paid a full price for SouthTrust but we got full value," Mr. Thompson said. "Our stock price will do better because of this deal over time."
In Florida, Wachovia will remain the No. 2 bank in terms of deposits behind Bank of America Corp. after completing the SouthTrust purchase. But Wachovia's share in Florida increases to 19% from 15%, according to SNL Financial, a Charlottesville, Va., bank-research firm. Bank of America, also based in Charlotte, N.C., retains a slim lead with its 20%. In Georgia, Wachovia will remain the top bank, boosting its share to 21% from 16%.
Mr. Thompson has had his eye on Texas, and the SouthTrust purchase gives Wachovia a foothold there through SouthTrust's 0.7% share of Texas deposits.
Wachovia said it will be able to cut costs by $255 million after taxes. Among the expected cuts are 4,300 jobs, or 4% of the combined banks' work force, and 130 to 150 branches.
In agreeing to sell, SouthTrust Chairman and CEO Wallace Malone Jr. acknowledged that it has become tough for regional banks to compete against behemoths such as Wachovia and the even bigger Citigroup Inc., J.P. Morgan Chase & Co., and Bank of America. "It's relentless," Mr. Malone said, raising the specter that other U.S. regional banks could find it hard to continue going it alone, which could lead to more acquisitions. "It doesn't stop. It's every day, in your face."
Fifth Third Bancorp, Cincinnati, is believed by people familiar with the banking industry to be interested in building a Southern presence. Fifth Third lost out in May to SunTrust Banks Inc., Atlanta, which agreed to acquire National Commerce Financial Corp. of Memphis. A Fifth Third spokeswoman said the bank doesn't comment on speculation.
Yesterday's acquisition announcement came after on-and-off negotiations between Wachovia and SouthTrust dating back to November. Wachovia was advised by UBS and attorneys Sullivan & Cromwell. Southtrust was advised by Merrill Lynch and law firms Bradley Arant Rose & White LLP and Burr & Forman.
Wachovia和SouthTrust将以换股方式合并
Wachovia Corp. (WB)同意透过价值143亿美元的股票交易收购SouthTrust Corp. (SOTR)，此项收购将扩大Wachovia在美国东南部市场的占有率，并加速其向得克萨斯州市场的扩张。
两家银行业控股公司在周一的新闻稿中称，Wachovia将以每0.89股该公司普通股交换1股SouthTrust的普通股。经过这笔交易，Wachovia在未来24个月中的每股现金收益将有所增加，在未来30个月中的每股营运收益也将有所提高。
运营收益不包括合并相关支出、重组支出和优先股派息，而现金收益除了不包括上述项目外，也不包括无形资产摊销。
按Wachovia上周五每股47美元的收盘价计算，SouthTrust在此项交易中作价每股41.83美元，较其上周五34.80美元的收盘价溢价20%。
Wachovia董事长兼首席执行长Ken Thompson在新闻稿中称，这笔交易让Wachovia在一些具吸引力且增长迅速的市场处于显著领先地位，并使公司业务得以扩展到东南和西南各州的新市场。
Wachovia和SouthTrust两家公司预计，交易完成后，在为期15个月的整合期结束后，上述交易每年将为合并后的公司节约成本2.55亿美元。
节约的成本相当于目前两家公司合并后每年费用的3%，或等于SouthTrust每年费用的36%。
两家公司预计，在整合期内，一次性支出约4.31亿美元，其中包括与合并相关的支出、重组支出以及会计调整。除此之外，为了获得监管当局对交易的批准，两家公司需要转让总额低于10亿美元的存款。
Wachovia表示，预计在第四财政季度交易完成后，公司服务的市场将扩大至美国15个州和哥伦比亚特区，而基于公司截至3月31日的预估收益计算，届时公司全部收益中来自银行和证券零售业务的比例将上升至75%。
Wachovia称，合并后的公司将拥有存款2,670亿美元，员工98,000人，在北卡罗来纳州、南卡罗来纳州、弗吉尼亚州和佐治亚州的零售银行市场的占有率排名第一，在哥伦比亚特区、佛罗里达州、阿拉巴马州、宾夕法尼亚州和新泽西州的市场占有率排名第二。
SouthTrust的董事长兼首席执行长Wallace Malone Jr.和公司另外两名董事将加入Wachovia董事会。不包括可行使的期权在内，Wallace持有或控制著SouthTrust总计490万股股票。
Wachovia总部将继续留在夏洛特。
Wachovia的高级执行副总裁David M. Carroll和SouthTrust的副董事长Frank Schmidt将主持两家公司的合并。
作为交易内容的一部分，Wachovia将在股东投票后、征求委托书之前在公开市场回购公司的普通股。
Wachovia预计，交易完成后，合并后的公司将产生17亿美元富余资本。该公司将用这些资金回购更多股票。
交易完成后，SouthTrust的Malone将担任Wachovia副董事长。
这项交易目前仍有待股东和监管当局的批准。若成功通过审核，将诞生一家资产4,640亿美元、市值760亿美元的公司。
在美国银行业两宗大型收购交易出炉后，市场一直预计资产排名全美第四的Wachovia也将进行大宗并购。此前的两宗并购交易分别是美国银行(Bank of America Corp., BAC)收购FleetBoston Financial Corp.和摩根大通公司(J.P. Morgan Chase & Co., JPM)收购美一银行(Bank One Corp., ONE)。
据Inet显示，Wachovia的股价在周一的盘前交易中下跌大约4.8%，至44.75美元；SouthTrust股价则上涨约9.2%，至38美元。
两家公司将于美东时间周一上午9点召开电话会议。
