Wachovia (#4 commercial bank in terms of assets, #5 in terms of revenue) agreed to buy California thrift Golden West Financial (the #2 Savings & Loan) for $25.5 billion, a 15% premium. Wachovia says the purchase will help the bank expand in affluent, fast-growing markets in the West. Golden West is an adjustable-rate mortgage specialist but will also give Wachovia 285 new branches, including 123 in California and 26 in Texas.
Shares of Wachovia fell fell 6.7%, the biggest decline since October 2002. Investors worried that Wachovia may have overpaid for Golden West, amid signs of weakness in the mortgage industry as interest rates rise. Wachovia also said the purchase will cut earnings per share by 11 cents in 2007 and seven cents in 2008.
Stories:
Wachovia CEO defends surprise Golden West deal
Wachovia to Acquire Golden West Bank for $26 Billion
Wachovia sees deal as fortification
Wachovia acquires Golden West
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