Wachovia to Buy Golden West

The $25 billion deal will give Charlotte, N.C.-based Wachovia a key West Coast foothold.
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Wachovia (WB) - Get Report announced late Sunday that it will acquire Golden West Financial (GDW) , the nation's second-largest savings and loan, for $25 billion in cash and stock.

If it is consummated, the deal will give Wachovia a strong foothold on the West Coast. In a news release, Charlotte, N.C.-based Wachovia said it would get 285 consumer banking offices with $62 billion in retail deposits in 10 states and enter new markets in California, Arizona, Colorado, Illinois, Kansas and Nevada.Golden West is headquartered in Oakland, Calif.

The announcement followed reports late Sunday in

The New York Times

and

The Wall Street Journal

citing people familiar with the transaction.

Terms of the agreement call for each Golden West shareholder to receive a package of 1.051 shares of Wachovia common stock and $18.65 in cash. Based on Wachovia's closing stock price Friday, this equals $81.07, a 15% premium over Golden West's closing price.

Wachovia expects to close the deal in the fourth quarter of this year and said it would be accretive to EPS two years after that, excluding merger-related and restructuring expenses. The deal should provide an internal rate of return of 17% for shareholders, Wachovia added.

The banking industry has undergone swift consolidation in recent years, and Wachovia has been one of the most active dealmakers. Golden West would be Wachovia's largest acquisition, and the deal would be the eighth-largest in U.S. banking history, according to the

Journal

.

Wachovia shares finished Friday up $1.01 at $59.39. Golden West gained $1.82 to close the session at $70.51.