Wachovia Investors OK Merger
Months of fighting about ownership of Wachovia Corp. ended abruptly Friday as its shareholders approved a $14.3-billion merger with First Union Corp., causing rival SunTrust Banks Inc. to concede defeat.
Just as swiftly, the focus of First Union Chairman Ken Thompson and Wachovia Chairman L.M. “Bud” Baker Jr. now has shifted from simply clearing the way for the merger to figuring out what will happen down the road.
The new bank--which will retain the Wachovia name and be based in Charlotte, N.C.--will be the nation’s fourth-largest with $328.6 billion in assets as of March 31, 19 million customers on the East Coast and 90,000 employees.
“I think what we’ve done here is look into the future and defined a path that will give our shareholders significant growth,” Baker said.
The companies expect the merger to be completed in the third quarter. Baker will become chairman of the new Wachovia, and Thompson will be president and chief executive.
On April 16, First Union and Wachovia announced plans to merge in a stock swap. A month later, SunTrust unveiled its own unsolicited takeover offer.
Wachovia’s 140,000 shareholders were bombarded in the ensuing months with letters and advertisements from all three banks.
All the while, First Union and Wachovia executives prepared to smooth the hoped-for transition. Now they say they’re prepared to move quickly to combine the companies.
They said it would take as many as three years to fully integrate the two banks. No branches will be closed in the first year, Thompson said.
The two banks are ready to name 100 top executives and have put 38 bank branches on the selling block to satisfy federal regulators. The “to do” list also includes naming a new board of directors and disclosing the details of job cuts and branch closings.
The merger partners expect eventually to cut 7,000 jobs--about half through attrition--and close about 325 branches. SunTrust had argued in its solicitations that its merger with Wachovia would have meant fewer job cuts and branch closings.
Shareholders seemed focused Friday on what the deal would mean in profitability.
Wachovia shareholder Tom Gooding, a retired furniture executive from High Point, N.C., voted for the First Union deal, which was approved earlier in the week by First Union shareholders.
The official proxy vote count won’t be released for two to three weeks, though Baker said the approval margin was in “the range of 3 to 1.” SunTrust isn’t challenging the preliminary results.
On the New York Stock Exchange, Wachovia shares rose 27 cents to $71.49, First Union rose 11 cents to $35.55, and SunTrust shares rose 45 cents to $69.93.
