Wachovia, the number four US bank, has said it intends to buy Golden West Financial for $25.5 billion (€20.06 billion).
In its biggest purchase, Wachovia will pay a combination of cash and stock totalling $81.07 per share - a 15 per cent premium to Golden West's closing share price on Friday.
California-based Golden West, the number two US savings and loan bank, will markedly increase Wachovia's presence in California, which Wachovia first entered on March 1st when it bought Westcorp and its WFS financial unit.
The deal will also raise Wachovia's exposure to the mortgage industry, which most analysts expect to slow as interest rates rise. Golden West is best known as an adjustable-rate mortgage lender, and runs lending operations under the World Savings Bank name in 39 US states.
Wachovia will pay 1.051 of its shares to each Golden West shareholder, along with $18.65 in cash.
The North Carolina-based bank said the combined companies would have $669 billion in assets and a market capitalisation of $117 billion. It also said the acquisition would extend Wachovia's banking franchise to within reach of 55 per cent of the US population.
Wachovia expected the deal to result in $53 million in annual cost savings phased in over two years, and to increase earnings per share by the end of its second year. - (Reuters)
