Wachovia deal gets OK: Bank's sale to Wells Fargo proceeds quietly

Richard Craver

Dec. 24, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- CHARLOTTE

In the end, there were no fireworks, no venting and few teary eyes at yesterday's formal approval of the sale of Wachovia (NYSE:WB) Corp. to Wells Fargo and Co. (NYSE:GWF) (NYSE:JWF) (NYSE:WSF) (NYSE:WPF) (NYSE:WFC)

There was just exhaustion and resignation --more than 600 Wachovia executives, shareholders and employees attended a shareholder meeting here -- to the sealed fate of a venerable bank with deep Winston-Salem roots. The deal is expected to close by next Wednesday.

Nearly 76 percent of Wachovia shareholders approved of Wells Fargo's shotgun-merger proposal, which was made Oct. 3. The deal, initially valued at $15.1 billion, was worth about $11.7 billion yesterday.

Coincidentally, almost the same percentage of Wachovia shareholders in August 2001 approved First Union Corp.'s takeover of Wachovia.

Robert Steel, who served as a caretaker for nearly half of his 7 1/2 -month run as Wachovia's chief executive, said that the demise of the bank came with a "variety of emotions."

"Disappointment that Wachovia won't stay independent, but the future of this company is quite exciting," said Steel, who is leaving Wachovia once the deal is done.

Steel, however, is not done with the merged bank.

Wells Fargo said yesterday that it has expanded its board of directors to 20 by adding four Wachovia directors: Steel, John Baker II, Donald James and Mackey McDonald. Their appointments are effective Jan. 1 once the deal is completed.

Steel pitched the deal to shareholders one more time, saying that in the current banking environment, having a coast-to-coast bank would improve the breadth and depth of services.

Several shareholders in attendance described the 39-minute meeting as a funeral.

The purchase had been all but assured once Wachovia provided Wells Fargo with control over nearly 40 percent of its preferred shares as a deal sweetener. Even the shareholder-protest Web site -- www.wachoviavoteno.com -- was shut down before yesterday's vote.

Though the deal could have been rejected, only five of Wachovia's 16 board members were in attendance, including Steel and Chairman Lanty Smith.

The atmosphere was in sharp contrast to the Wachovia meeting on the First Union deal in 2001, in which some frustrated shareholders drew applause for sharp comments opposing the merger.

Yesterday, Wachovia didn't leave security to chance, requiring those attending the meeting to go through a metal detector and wear an identification badge.

Only five people spoke during the comment period.

Two decried the moves that they said paved the way for Wachovia's fall: in particular how the board of directors rubber-stamped former chairman and chief executive Ken Thompson's risky agenda for Wachovia. In particular, they cited the $25.2 billion deal for Golden West Financial Corp.'s exotic, but ultimately toxic, mortgage portfolio in 2006.

John Moore, a shareholder activist from Charlotte, said he didn't expect to get much of a reaction from the board, considering the lack of response to his words at five other shareholders meetings. That's even though Moore owned 500,000 shares of Wachovia and still owns about 200,000 shares after selling 60 percent of his holdings at $28 a share earlier this year.

"Thousands have lost millions as they invested in what they thought was a conservative bank," Moore said. "Employees are facing spouses and their children with the prospects of having no job.

"The needs of the many have been sacrificed to fulfill the desires of the few."

Another two speakers urged the board to do its best to preserve as many of the 20,000 Charlotte and 2,900 Winston-Salem jobs as possible within Wells Fargo.

John Stumpf, the chief executive of Wells Fargo, said in a statement that "the actual merger integration of our companies' systems, operations, products and services will be done very thoughtfully and deliberately over the next two to three years."

Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.

Newstex ID: KRTB-0222-30678322