Wachovia to Snap Up A.G. Edwards in $6.8B Deal

June 01, 2007 By Barbra Murray, Contributing Editor



Wachovia Corp. moves up higher on the list of the largest financial firms in the U.S. The company has just agreed to acquire A.G. Edwards in a transaction valued at approximately $6.8 billion, or $89.50 per share. A.G. Edwards will be incorporated into Wachovia Securities L.L.C., which will become one of the country's biggest retail brokerage firms, boasting $1.1 trillion in client assets.

As per the agreement, holders of A.G. Edwards shares will be given .9844 shares of Wachovia common stock and $35.80 in cash per share. The newly enhanced Wachovia Securities will have 3,350 brokerage offices, 1,500 of which will be dedicated retail offices, covering every state in the country, as well as the District of Columbia. As for the collective real estate involved, a Wachovia spokesperson told CPN, "The company hasn't made any real estate decisions at this time." The rest of A.G. Edwards' businesses--research underwriting, investment banking mutual funds and trust--will also be absorbed and added to comparable Wachovia businesses. For Wachovia, the deal will allow the company to continue moving forward with its strategy of greatly increasing its presence through internal growth, as well as through acquisitions.

In 2001, Wachovia completed its $14.6 billion merger with First Union Corp., creating a behemoth financial holding company. In 2003, Wachovia and Prudential Financial Inc.'s Prudential Securities brought their retail brokerage businesses together, forming a gargantuan retail financial entity. The following year, it acquired SouthTrust Corp. for $14.3 billion and Westcorp for nearly $4 billion. And in 2006 Wachovia spent $25.5 billion on the acquisition of Golden West Financial.

A.G. Edwards shareholders must sign off on the merger agreement before the transaction can move forward. If all goes as planned, the deal will close during the fourth quarter of this year, and the combining of the two companies will reach completion during the first quarter of 2009. Wachovia relied on Credit Suisse Securities (USA) L.L.C., Wachovia Securities and Simpson Thacher & Bartlett L.L.P. in the transaction; while A.G. Edwards turned to Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz for representation.

Wachovia is just one of a bevy of financial institutions that have been active in the consolidation of the industry. In April, Bank of America Corp. signed a definitive agreement to acquire ABN AMRO North America Holding Co.--which is the parent company of LaSalle Bank Corp.--and its subsidiaries for $21 billion. The deal will increase Bank of America's profile with the addition of 1.4 million retail customers, 17,000 commercial banking clients, and 411 banking centers in metropolitan Chicago, Michigan and Indiana.

A.G. Edwards Inc., headquartered in St. Louis, Mo., is a financial services holding company with 742 offices in the U.S. and two in London and Geneva. Charlotte, N.C.-based Wachovia Corp., a diversified financial services company, provides retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. Wachovia Securities is Wachovia's full service retail brokerage firm and has $773 billion in client assets and 2,600 locations nationwide as of March 31. The newly combined entity will be based in St.


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