ST. LOUIS and CHARLOTTE, N.C., May 31 /PRNewswire-FirstCall/ --
Wachovia Corp. (NYSE: WB) and A.G. Edwards Inc. (NYSE: AGE) announced today
an agreement under which Wachovia will acquire A.G. Edwards, which will be
combined with Wachovia Securities, LLC, to create an industry-leading
retail brokerage firm with $1.1 trillion in client assets and nearly 15,000
financial advisors. The combined firm will have an enhanced share of the
U.S. brokerage market with significantly increased penetration in 48 of the
50 largest metropolitan statistical areas.
The combined full-service firm will have a national footprint of 3,350
brokerage locations, including 1,500 dedicated retail offices in all 50
states and the District of Columbia. The combined organization will offer
objective advice to clients based on research from multiple providers,
provide industry-leading customer service using an open architecture
platform, and have access to a broad suite of financial products and
"The long-term growth opportunities of the brokerage industry are
extremely compelling to Wachovia, and we have long expressed our interest
in growing this business both organically and through acquisition," said
Ken Thompson, Wachovia chairman and CEO. "This combination with A.G.
Edwards, which is widely considered one of the most highly regarded
remaining independent brokerage firms in the industry, will further enhance
our scale and relevance."
The combined retail brokerage organization will be headquartered in St.
Louis, Missouri. Other A.G. Edwards businesses including research,
underwriting and investment banking, mutual funds and trust will be
consolidated into the appropriate Wachovia lines of business. The combined
firm will operate as Wachovia Securities. The merger is expected to be
completed in the fourth quarter of 2007 and integration is expected to be
completed by the end of the first quarter of 2009.
Daniel J. Ludeman, a 27-year veteran of the brokerage industry, is
currently president and CEO of Wachovia Securities and will be the
president and CEO of the combined brokerage firm. Robert L. Bagby, who has
been chairman and CEO of A.G. Edwards since 2001, will serve as chairman of
the combined brokerage firm. He joined A.G. Edwards in 1975.
"This combination will bring together two similar companies determined
to preserve and enhance a corporate culture that is focused on attracting
the nation's best financial advisors, respecting client relationships,
providing unbiased advice and delivering excellent client service," said
Bagby. "In assessing potential merger partners, we looked carefully for an
organization that would offer A.G. Edwards the scale and enriched product
suite required to fuel continued growth, while preserving the
characteristics and culture that have made our organization so successful.
In Wachovia Securities, we believe we found the perfect partner."
Wachovia Securities reports to David Carroll, president of Wachovia
Corporation's Capital Management Group. As consolidation continues in the
brokerage industry, the opportunity to combine with a premier firm like
A.G. Edwards was "a rare chance to solidify our leadership in the industry
with the scope and resources required to be the firm of choice for clients
and for quality financial advisors," Carroll said. "Our focus on providing
our advisors and consultants with best-in-class tools, products and support
to meet their clients' needs will help us continue to enhance the
productivity and efficiency of our combined firm."
Carroll noted that Wachovia is known for its success and expertise in
integrations, including six brokerage firms since 1998, of which the joint
venture with Prudential Securities was the largest.
John Strangfeld, vice chairman of Prudential Financial, Inc. [NYSE:
PRU], which currently owns 38 percent of Wachovia Securities, said, "We are
very pleased with our investment in Wachovia Securities and our partnership
with Wachovia management. We believe the combination of A.G. Edwards and
Wachovia Securities is highly attractive and takes the business to a new
level of prominence and promise. We have complete confidence in
management's ability to make this deal successful."
Under the terms of the agreement, A.G. Edwards' shareholders will
receive 0.9844 shares of Wachovia common stock and $35.80 in cash for each
of their A.G. Edwards common shares. Based on Wachovia's share price at the
close of business on May 30, 2007, the transaction would be valued at
$89.50 per A.G. Edwards share.
The combined organization is expected to benefit from significant
annual expense efficiencies, estimated at $395 million after tax by 2009.
These efficiencies represent 10 percent of the combined firm's most recent
fiscal year-end expense base. Wachovia is expected to record merger-related
and restructuring charges and exit cost purchase accounting adjustments of
approximately $860 million after tax in connection with the transaction
over the 18-month integration period.
The transaction is anticipated to be accretive to Wachovia's earnings
per share excluding merger-related and restructuring expense and
intangibles amortization in the first full year following the closing, not
including the effect of one-time charges. The transaction also provides an
internal rate of return of 24 percent, far exceeding Wachovia's cost of
capital. Completion of the merger is subject to A.G. Edwards' shareholder
approval and normal regulatory approvals. Credit Suisse Securities (USA)
LLC, Wachovia Securities and Simpson Thacher & Bartlett LLP represented
Wachovia, and Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz
represented A.G. Edwards.
A.G. Edwards Dividend: In an unrelated announcement, the Board of
Directors of A.G. Edwards, Inc. announced today a regular quarterly cash
dividend of 20 cents per share, payable on July 2, 2007, to stockholders of
record June 8, 2007.
About Wachovia and Wachovia Securities LLC
Wachovia Corporation (NYSE: WB) is one of the nation's largest
diversified financial services companies, providing a broad range of retail
banking and brokerage, asset and wealth management, and corporate and
investment banking products and services. Wachovia has retail and
commercial banking operations in 21 states with 3,400 retail banking
offices from Connecticut to Florida and west to Texas and California.
Nationwide, Wachovia provides retail brokerage products and services in 48
states, mortgage lending in all 50 states and auto finance covering 46
states. Globally, clients are served in selected corporate and
institutional sectors and through more than 40 international offices.
Online banking is available at wachovia.com; online brokerage products and
services at wachoviasec.com; and investment products and services at
evergreeninvestments.com. At March 31, 2007, Wachovia had assets of $706.4
billion and market capitalization of $105.3 billion.
Wachovia Securities is one of the nation's largest full service retail
brokerage firms with more than $773 billion in client assets, providing
financial advisory, brokerage, asset management and other financial
services through approximately 10,700 registered representatives in more
than 2,600 locations nationwide as of March 31, 2007. Wachovia Securities
is the trade name used by two separate, registered broker-dealers and
non-bank affiliates of Wachovia Corporation providing certain retail
securities brokerage services: Wachovia Securities, LLC, member NYSE/SIPC,
and Wachovia Securities Financial Network, LLC, member NASD/SIPC.
About A.G. Edwards
A.G. Edwards, Inc. is a financial services holding company whose
primary subsidiary is the national investment firm of A.G. Edwards & Sons,
Inc. Drawn to the firm's client-first philosophy, individuals and
businesses have turned to A.G. Edwards, Inc. for sound advice and access to
a wide array of investment products and services that can help them meet
their financial goals and objectives. Founded in 1887, A.G. Edwards and its
affiliates employ 6,618 financial consultants in 742 offices nationwide and
two European locations in London and Geneva. More information can be found
Announcement Conference Call: Executives from both companies will
discuss the merger of the brokerage firms on a conference call today at 9
a.m. Eastern time. The call will be available by telephone and audio
webcast. During the call, the speakers will review information presented in
handouts that are available through wachovia.com/investor. Participants are
encouraged to access the handouts before the teleconference begins.
Webcast Instructions: To access the audio webcast go to
wachovia.com/investor and click on the audio webcast link. Please log on to
the website at least 10 minutes prior to the call to register and download
and install any necessary audio software. A replay of the webcast also will
be available beginning by 1 p.m. Eastern time today.
Teleconference Instructions: The telephone number for today's
conference call is 888-357-9787 for U.S. callers (706-679-7342 for
international callers). You will be asked to provide your name and business
affiliation. Mention the conference access code: Wachovia. A continuous
telephone replay will be available by 1 p.m. Eastern time today through 5
p.m. Eastern time on June 29. The replay telephone number is 706-645-9291,
access code: 2879501.
Video News Release: B-roll and soundbites from David Carroll, head of
the Capital Mangement Group at Wachvoia, can be downlinked from the
following coordinates: Galaxy 25C, Transponder 23, 11 a.m. to 11:15 a.m.
Eastern time, Thursday, May 31. Downlink frequency 4160 MHz (V).
Forward Looking Statements
This news release contains, and the webcast discussed above will
contain, certain forward-looking statements with respect to each of
Wachovia and A.G. Edwards and the combined company following the proposed
merger between Wachovia and A.G. Edwards (the "Merger"), as well as the
goals, plans, objectives, intentions, expectations, financial condition,
results of operations, future performance and business of Wachovia,
including, without limitation, (i) statements relating to the benefits of
the Merger, including future financial and operating results, cost savings,
enhanced revenues and the accretion/dilution to reported earnings that may
be realized from the Merger, (ii) statements relating to the benefits of
the merger between Wachovia and Golden West Financial Corporation ("Golden
West") completed on October 1, 2006 (the "Golden West Merger"), including
future financial and operating results, cost savings, enhanced revenues and
the accretion to reported earnings that may be realized from the Golden
West Merger, (iii) statements regarding certain of Wachovia's and/or A.G.
Edwards' goals and expectations with respect to earnings, earnings per
share, revenue, expenses and the growth rate in such items, as well as
other measures of economic performance, including statements relating to
estimates of Wachovia's credit quality trends, and (iv) statements preceded
by, followed by or that include the words "may", "could", "should",
"would", "believe", "anticipate", "estimate", "expect", "intend", "plan",
"projects", "outlook" or similar expressions. These statements are based
upon the current beliefs and expectations of Wachovia's management and are
subject to significant risks and uncertainties. Actual results may differ
from those set forth in the forward- looking statements. These
forward-looking statements involve certain risks and uncertainties that are
subject to change based on various factors (many of which are beyond
Wachovia's and A.G. Edwards' control).
The following factors, among others, could cause Wachovia's financial
performance to differ materially from that expressed in such
forward-looking statements: (1) the risk that the businesses of Wachovia
and A.G. Edwards, in connection with the Merger or the businesses of
Wachovia and Golden West in connection with the Golden West Merger will not
be integrated successfully or such integration may be more difficult,
time-consuming or costly than expected; (2) the risk that expected revenue
synergies and cost savings from the Merger or the Golden West Merger may
not be fully realized or realized within the expected time frame; (3) the
risk that revenues following the Merger or the Golden West Merger may be
lower than expected; (4) deposit attrition, operating costs, customer loss
and business disruption following the Merger or the Golden West Merger,
including, without limitation, difficulties in maintaining relationships
with employees, may be greater than expected; (5) the inability to obtain
governmental approvals of the Merger on the proposed terms and schedule;
(6) the failure of A.G. Edwards' shareholders to approve the Merger; (7)
the risk that the strength of the United States economy in general and the
strength of the local economies in which Wachovia and/or A.G. Edwards
conducts operations may be different than expected resulting in, among
other things, a deterioration in credit quality or a reduced demand for
credit, including the resultant effect on Wachovia's loan portfolio and
allowance for loan losses; (8) the effects of, and changes in, trade,
monetary and fiscal policies and laws, including interest rate policies of
the Board of Governors of the Federal Reserve System; (9) potential or
actual litigation; (10) inflation, interest rate, market and monetary
fluctuations; and (11) adverse conditions in the stock market, the public
debt market and other capital markets (including changes in interest rate
conditions) and the impact of such conditions on Wachovia's and A.G.
Edwards' brokerage and capital markets activities. Additional factors that
could cause Wachovia's and A.G. Edwards' results to differ materially from
those described in the forward-looking statements can be found in
Wachovia's and A.G. Edwards' Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K filed with the SEC. All
subsequent written and oral forward-looking statements concerning Wachovia
or the proposed Merger or other matters and attributable to Wachovia or
A.G. Edwards or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements above. Wachovia and A.G.
Edwards do not undertake any obligation to update any forward-looking
statement, whether written or oral, relating to the matters discussed in
The proposed Merger will be submitted to A.G. Edwards' shareholders for
their consideration. Wachovia will file a registration statement with the
SEC, which will include a proxy statement/prospectus regarding the proposed
Merger. A.G. Edwards' shareholders and other investors are urged to read
the registration statement and the proxy statement/prospectus when they
become available, as well as any other relevant documents concerning the
proposed Merger filed with the SEC (and any amendments or supplements to
those documents), because they will contain important information. You will
be able to obtain a free copy of the registration statement and the proxy
statement/prospectus, as well as other filings containing information about
Wachovia and A.G. Edwards, at the SEC's website (http://www.sec.gov) and at
the companies' respective websites, www.wachovia.com and www.agedwards.com.
Copies of the proxy statement/prospectus and the SEC filings that will be
incorporated by reference in the proxy statement/prospectus can also be
obtained, free of charge, by directing a request to Wachovia Corporation,
Investor Relations, One Wachovia Center, 301 South College Street,
Charlotte, NC 28288-0206, 704-383-0798; or to A.G. Edwards, Inc., Investor
Relations, One North Jefferson Avenue, St. Louis, MO 63103, 314-955-3000.
Wachovia and A.G. Edwards and their respective directors and executive
officers, may be deemed to be participants in the solicitation of proxies
from the shareholders of A.G. Edwards in connection with the proposed
Merger. Information about the directors and executive officers of Wachovia
is set forth in the proxy statement for Wachovia's 2007 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on March 9, 2007.
Information about the directors and executive officers of A.G. Edwards is
set forth in the proxy statement for A.G. Edwards' 2007 annual meeting of
shareholders, as filed with the SEC on a Schedule 14A on May 15, 2007.
Additional information regarding the interests of those participants and
other persons who may be deemed participants in the Merger may be obtained
by reading the proxy statement/-prospectus regarding the proposed Merger
when it becomes available. You may obtain free copies of these documents as
described in the preceding paragraph.
SOURCE Wachovia Corporation