Wachovia buys A.G. Edwards

ChiefsFan4Life · 05-31-2007, 08:14 AM

http://www.foxnews.com/story/0,2933,276644,00.html

NEW YORK — Wachovia Corp. (WB), the fourth-largest U.S. bank, Thursday said it will buy A.G. Edwards Inc. for $6.8 billion in cash and stock, creating the second-largest U.S. retail brokerage.

Charlotte, North Carolina-based Wachovia expects to fold A.G. Edwards into its Wachovia Securities brokerage, pushing deeper into metropolitan areas.

The combined brokerage would have about 14,784 brokers, ranking behind Merrill Lynch & Co. ; and $1.15 trillion of client assets, ranking third behind Merrill and Citigroup Inc., Wachovia said. It would employ more than 31,000 people, and command a 14 percent market share.

"Long-term growth opportunities of the brokerage industry are extremely compelling to Wachovia," Wachovia Chief Executive Ken Thompson said in a statement. "This combination ... will further enhance our scale and relevance."

A.G. Edwards shareholders will receive 0.9844 of a Wachovia share and $35.80 in cash for each of their shares.

The terms value A.G. Edwards at $89.50 per share, a 16 percent premium over their Wednesday closing price. A.G. Edwards shares had already risen 22 percent this year.

(Story continues below)

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The transaction comes nearly eight months after Wachovia completed the $24.2 billion purchase of U.S. savings and loan Golden West Financial Corp.

"(We) see significant cost savings as well as opportunities for Wachovia to overlay its broader product set," wrote Lehman Brothers Inc. analyst Jason Goldberg. "The purchase also reduces its mortgage contribution (to overall results)."

Wachovia has 8,166 brokers and $773 billion of client assets. A.G. Edwards, founded in 1887, has 6,618 brokers and $374 billion of client assets. The combined brokerage would keep its name and be based in St. Louis, home of A.G. Edwards.

Prudential Financial Inc. has a 38 percent stake in Wachovia Securities, and said it supports the merger.

Wachovia Securities Chief Executive Daniel Ludeman will retain his title, while A.G. Edwards Chairman and Chief Executive Robert Bagby will be chairman. Bagby, reached at his St. Louis office, said he could not comment.

Wachovia expects $395 million of cost savings, or 10 percent of combined expenses, and to incur $860 million of merger charges over 18 months.

It expects the transaction to boost earnings per share excluding items in the first year, and generate a 24 percent internal rate of return.

The transaction is expected to close in the fourth quarter, pending shareholder and regulatory approvals.

Credit Suisse, Wachovia Securities and the law firm Simpson Thacher & Bartlett LLP represented Wachovia on the transaction, while Goldman Sachs & Co. and the law firm Wachtell, Lipton, Rosen & Katz represented A.G. Edwards.

Wachovia shares closed Wednesday at $54.55 on the New York Stock Exchange.
--------------

I know there are some Chiefs fans in St. Louis (like myself). Anyone here work at AGE? I am there right now but I am a consultant for another company.

**Buehler445** · 05-31-2007, 08:43 AM

This is huge money. It is amazing to watch financial companies merge. It will be interesting to see if the companies can function together. This is an aweful big merger just to reach deeper in metro areas.

StcChief · 05-31-2007, 08:46 AM

will be interesting to see what that does to the AG Edwards IT organization in Downtown STL.

**Buehler445** · 05-31-2007, 09:06 AM

Quote:

Originally Posted by StcChief

will be interesting to see what that does to the AG Edwards IT organization in Downtown STL.

Do you work for them?

StcChief · 05-31-2007, 09:12 AM

Quote:

Originally Posted by Buehler445

Do you work for them?

Nope... some of our consultants are down there.

Mergers can be good / bad depending on how the re-org goes. Who's left on top and how they wanna work in the future. Transitionally for a few months then the merge/cuts happen.

Skyy God · 05-31-2007, 09:33 AM

Quote:

Originally Posted by StcChief

Nope... some of our consultants are down there.

Mergers can be good / bad depending on how the re-org goes. Who's left on top and how they wanna work in the future. Transitionally for a few months then the merge/cuts happen.

First, I'd characterize this as an acquisition, not a merger. Second, not that I've looked at anything related to this deal specifically, but it's likely not positive for the St. Louis economy. It'll take executives and legal business out of the market.

eazyb81 · 05-31-2007, 09:47 AM

A buddy of mine just got on with Wachovia in the investment banking department, i'm guessing he's pretty happy with this news.

Eleazar · 05-31-2007, 09:56 AM

You have to expect cuts often when a merger or acquisition happens. There are going to be tons of duplicated business processes. The only question is how painful or expensive they are going to be to eliminate.

These do often happen just to acquire customers or markets.

**Buehler445** · 05-31-2007, 10:02 AM

Quote:

Originally Posted by StcChief

Nope... some of our consultants are down there.

Mergers can be good / bad depending on how the re-org goes. Who's left on top and how they wanna work in the future. Transitionally for a few months then the merge/cuts happen.

I'd tell them to keep their resume updated. Even if they keep their job, they may not like the culture after the restructure.

Amnorix · 05-31-2007, 10:05 AM

Quote:

Originally Posted by Pittsie

First, I'd characterize this as an acquisition, not a merger. Second, not that I've looked at anything related to this deal specifically, but it's likely not positive for the St. Louis economy. It'll take executives and legal business out of the market.

There are 3 ways for Company A to buy Company B:

1. merger
2. asset purchase
3. stock purchase

For some reason, people talk about "mergers" as if it's two different people who have now agreed to become married, and go forward together as equals. That is pretty much what NEVER happens. Every merger is just Company A acquiring Company B. Of course, the rhetoric is how Company A is going to love having Company B and its people around, how the thoughts, wishes, desires and culture of Company B will be respected, etc.

That's mostly hogwash.

ChiefsFan4Life · 05-31-2007, 11:22 AM

Quote:

Originally Posted by Cochise

You have to expect cuts often when a merger or acquisition happens. There are going to be tons of duplicated business processes. The only question is how painful or expensive they are going to be to eliminate.

These do often happen just to acquire customers or markets.

Yep, as a consultant out here I am concerned that my time with this client will end very soon (contractors I'm sure are the first to go) but hopefully my home consulting company has a Plan B for all the folks here to move on to other projects.

ChiefsFan4Life · 05-31-2007, 11:22 AM

Quote:

Originally Posted by StcChief

Nope... some of our consultants are down there.

I am guessing you work for Accenture?

StcChief · 05-31-2007, 11:59 AM

Quote:

Originally Posted by ChiefsFan4Life

I am guessing you work for Accenture?

Nope. Smaller local STL firm.

Accenture is down there? Will see how long that lasts with their Rates

ChiefsFan4Life · 05-31-2007, 01:26 PM

Quote:

Originally Posted by StcChief

Nope. Smaller local STL firm.

Accenture is down there? Will see how long that lasts with their Rates

I am a consultant for a smaller local STL IT Consulting company too

Yeah, Accenture is out here, they've been out here for about 2 years or so if I heard correctly. They, along with the company I work for, have a pretty strong relationship with AGE

**Baby Lee** · 05-31-2007, 01:30 PM

Quote:

Originally Posted by StcChief

will be interesting to see what that does to the AG Edwards IT organization in Downtown STL.

My uncle is a programmer out in their Maryland Heights [StL suburb] facility.

Does this mean the Rams will be playing at the Wachovia Dome?

05-31-2007, 08:14 AM
ChiefsFan4Life DT: HOF Class of 2009 Join Date: Sep 2005 Location: House Springs, MO Casino cash: $10004900	Wachovia buys A.G. Edwards http://www.foxnews.com/story/0,2933,276644,00.html NEW YORK — Wachovia Corp. (WB), the fourth-largest U.S. bank, Thursday said it will buy A.G. Edwards Inc. for $6.8 billion in cash and stock, creating the second-largest U.S. retail brokerage. Charlotte, North Carolina-based Wachovia expects to fold A.G. Edwards into its Wachovia Securities brokerage, pushing deeper into metropolitan areas. The combined brokerage would have about 14,784 brokers, ranking behind Merrill Lynch & Co. ; and $1.15 trillion of client assets, ranking third behind Merrill and Citigroup Inc., Wachovia said. It would employ more than 31,000 people, and command a 14 percent market share. "Long-term growth opportunities of the brokerage industry are extremely compelling to Wachovia," Wachovia Chief Executive Ken Thompson said in a statement. "This combination ... will further enhance our scale and relevance." A.G. Edwards shareholders will receive 0.9844 of a Wachovia share and $35.80 in cash for each of their shares. The terms value A.G. Edwards at $89.50 per share, a 16 percent premium over their Wednesday closing price. A.G. Edwards shares had already risen 22 percent this year. (Story continues below) Advertise Here Advertisements The transaction comes nearly eight months after Wachovia completed the $24.2 billion purchase of U.S. savings and loan Golden West Financial Corp. "(We) see significant cost savings as well as opportunities for Wachovia to overlay its broader product set," wrote Lehman Brothers Inc. analyst Jason Goldberg. "The purchase also reduces its mortgage contribution (to overall results)." Wachovia has 8,166 brokers and $773 billion of client assets. A.G. Edwards, founded in 1887, has 6,618 brokers and $374 billion of client assets. The combined brokerage would keep its name and be based in St. Louis, home of A.G. Edwards. Prudential Financial Inc. has a 38 percent stake in Wachovia Securities, and said it supports the merger. Wachovia Securities Chief Executive Daniel Ludeman will retain his title, while A.G. Edwards Chairman and Chief Executive Robert Bagby will be chairman. Bagby, reached at his St. Louis office, said he could not comment. Wachovia expects $395 million of cost savings, or 10 percent of combined expenses, and to incur $860 million of merger charges over 18 months. It expects the transaction to boost earnings per share excluding items in the first year, and generate a 24 percent internal rate of return. The transaction is expected to close in the fourth quarter, pending shareholder and regulatory approvals. Credit Suisse, Wachovia Securities and the law firm Simpson Thacher & Bartlett LLP represented Wachovia on the transaction, while Goldman Sachs & Co. and the law firm Wachtell, Lipton, Rosen & Katz represented A.G. Edwards. Wachovia shares closed Wednesday at $54.55 on the New York Stock Exchange. -------------- I know there are some Chiefs fans in St. Louis (like myself). Anyone here work at AGE? I am there right now but I am a consultant for another company.
Posts: 2,031

05-31-2007, 08:43 AM	#2
Buehler445 Supporter Join Date: Apr 2007 Location: Scott City KS Casino cash: $2134734	This is huge money. It is amazing to watch financial companies merge. It will be interesting to see if the companies can function together. This is an aweful big merger just to reach deeper in metro areas.
Posts: 56,877

05-31-2007, 08:46 AM	#3
StcChief Playing for #1 Draft Pick Join Date: Oct 2003 Location: Just West of Lambs land Casino cash: $10004900	will be interesting to see what that does to the AG Edwards IT organization in Downtown STL.
Posts: 25,901

05-31-2007, 09:47 AM	#7
eazyb81 The Illuminati Join Date: Oct 2004 Location: the road less traveled Casino cash: $10004900	A buddy of mine just got on with Wachovia in the investment banking department, i'm guessing he's pretty happy with this news.
Posts: 12,033

05-31-2007, 09:56 AM	#8
Eleazar Beyond the Rapids Join Date: May 2003 Location: Langley, VA Casino cash: $-370000	You have to expect cuts often when a merger or acquisition happens. There are going to be tons of duplicated business processes. The only question is how painful or expensive they are going to be to eliminate. These do often happen just to acquire customers or markets.
Posts: 80,659