BRADENTON, Fla. - Wachovia Corp. announced yesterday that it signed a definitive mergeragreement with Birmingham, Ala.-based SouthTrust Corp. in a move that will combine twoof the largest municipal bond portfolios in the U.S. and augment Wachovia's businessthroughout the fast-growing Southeast.
Charlotte, N.C.-based Wachovia expects to pay $14.3 billion in stock for SouthTrust ifshareholders and regulators approve the sale. The headquarters would remain inCharlotte.
SouthTrust, a $52.7 billion regional bank holding company, operates 712 banking and loanoffices and 894 automated teller machines in a territory that includes Alabama, Florida,Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Virginia.
With combined assets of $464 billion and market capitalization of $76 billion, Wachoviawould be the nation's fourth-largest financial holding company based on assets and theNo. 1 bank in the Southeast with 18% deposit share, with new access to the fast-growingTexas market, company officials said.
Officials project that, following the merger, Wachovia would have the top retail bankingmarket share in North Carolina, Virginia, Georgia, and South Carolina, and the second-largest market share in Washington, D.C., Florida, Alabama, Pennsylvania, and NewJersey.
While specific details were not released yesterday, the merger has the potential tocombine two of the largest muni portfolios, and provide Wachovia with the benefits fromSouthTrust's recent expansion efforts in Florida and Georgia.
Wachovia ranked third and SouthTrust ranked 31st out of the top 500 largest municipalportfolios held by U.S. banks, according to Sheshunoff Information Services Inc. in aMay listing based on year-end holdings for 2003, 2002, 2001, and 2000.
SouthTrust is trustee for 495 bond issues involving $8.6 billion of tax-exempt debt and126 bond issues worth $2.2 billion of taxable debt, as well as paying agent for 278issues involving $5 billion of debt, according to the Spring 2004 edition of The BondBuyer's Municipal Marketplace, also known as the "red book."
Year to date, SouthTrust has been named trustee for five new municipal bond issuestotaling $545 million, ranking 16th nationally, according to Thomson Financial. Wachoviaranks fifth, as it has been trustee for 129 issues totaling $4.6 billion.
Both banks operate brokerage and public finance services, though no information wasreleased yesterday about the fate of either subsidiary.
SouthTrust Securities, Inc. so far this year has senior-managed seven new municipal bondissues totaling $54 million. Wachovia has been senior manager on 115 issues totaling$1.8 billion, ranking 16th in the nation.
"It's too early for us to say or give specifics about how the merger will affect ourpublic finance group,"
Wachovia Securities spokesman Jim Pierpoint said. "We should have a
better understanding further down the line."
SouthTrust just last month lit signs atop a new, 21-story building at the landmarkAtlantic Station, a partially bond-financed development in Atlanta. It will serve as thehome for its Georgia operations as well as for its corporate banking, general banking,and capital management divisions.
On May 14, SouthTrust completed the acquisition of FloridaFirst Bancorp Inc. and itssubsidiary FloridaFirst Bank based in Lakeland, Fla., adding 19 branches and $821million of assets to SouthTrust's portfolio. SouthTrust projected that conversion of theFloridaFirst customer base would be completed by late July.
The merger between SouthTrust and Wachovia is expected to close in the fourth quarter of2004 and is subject to normal regulatory approvals and approval by both companies'shareholders.
"This transaction gives us clear leadership in a number of attractive, high-growthstates, and extends our reach into new southeastern and southwestern states," Wachoviapresident Ken Thompson said in a prepared statement. "It is also financially attractivefor both sets of shareholders. It meets Wachovia's investment return guidelines, whileimproving the long-term growth prospects for both companies."
