CHARLOTTE, N.C., Dec. 17 /PRNewswire-FirstCall/ -- Wachovia Corporation
announced today the settlement of the purported class action lawsuit filed in
North Carolina challenging the proposed merger of Wells Fargo and Wachovia.
The company disclosed the following information in a Form 8-K filed with
the Securities and Exchange Commission today:
As previously disclosed at pages 73-74 of the definitive proxy
statement/prospectus of Wachovia, dated November 21, 2008, included in Wells
Fargo's Registration Statement on Form S-4 (File No. 333- 154879), as amended,
under the heading "The Merger -- Litigation Relating to the Merger," Wachovia,
the members of its board of directors, and Wells Fargo have been named as
defendants in certain actions filed on behalf of Wachovia shareholders
challenging the proposed merger of Wells Fargo and Wachovia. As disclosed in
the proxy statement, one such action, a purported class action captioned
Irving Ehrenhaus v. John D. Baker, et al., was filed in the Superior Court for
the County of Mecklenburg in the State of North Carolina.
On December 5, 2008, the Court in the Ehrenhaus action denied preliminary
injunctive relief with respect to, among other things, the issuance and voting
of preferred shares issued by Wachovia to Wells Fargo on October 20, 2008 in
connection with the merger that represent 39.9% of the voting power of
Wachovia's capital stock. The Court did enjoin enforcement of a provision of
the transaction documentation providing that the preferred shares could not be
redeemed by Wachovia for at least 18 months following the shareholder vote on
the merger agreement, even if the merger were not approved by the shareholders
(the "18-Month Tail Provision").
On December 17, 2008, the defendants entered into a memorandum of
understanding with the plaintiffs regarding the settlement of the Ehrenhaus
action. In connection with the settlement contemplated by the memorandum of
understanding, Wachovia and Wells Fargo agreed not to appeal from the portion
of the Court's Order dated December 5, 2008 that enjoins the 18 Month Tail
Provision. Wells Fargo for its part also agreed to waive the enforceability
by Wells Fargo of the 18 Month Tail Provision to the extent enjoined by the
Court's Order. Wachovia and Wells Fargo also agreed to make certain
additional disclosures related to the proposed merger, which are contained in
this news release. The memorandum of understanding contemplates that the
parties will enter into a stipulation of settlement.
The stipulation of settlement will be subject to customary conditions,
including court approval following notice to Wachovia's shareholders. In the
event that the parties enter into a stipulation of settlement, a hearing will
be scheduled at which the Court will consider the fairness, reasonableness,
and adequacy of the settlement. There can be no assurance that the parties
will ultimately enter into a stipulation of settlement or that the Court will
approve the settlement even if the parties were to enter into such
stipulation. In such event, the proposed settlement as contemplated by the
memorandum of understanding may be terminated.
SUPPLEMENT TO DEFINITIVE PROXY STATEMENT
In connection with the settlement of certain outstanding shareholder
litigation as described in this news release, Wachovia has agreed to make
these supplemental disclosures to the proxy statement dated November 21, 2008.
This supplemental information should be read in conjunction with the proxy
statement, which should be read in its entirety.
Background of the Merger
The following disclosure supplements the discussion at pages 29-30 of the
proxy statement concerning discussions with potential partners other than
Wells Fargo.
Wachovia did not contact, and was not contacted by, any of these potential
partners with respect to a possible combination or acquisition transaction
following its execution of the merger agreement with Wells Fargo on October 3.
The following disclosure supplements the discussion at pages 32-35 of the
proxy statement concerning the background of the merger.
During the period from September 29 through October 3, Wachovia did not
have discussions with potential transaction partners other than Wells Fargo
and Citigroup.
The following disclosure supplements the discussion at page 35 of the
proxy statement concerning Wachovia's October 2-3 board meeting.
Wachovia management's belief that the FDIC was prepared to place
Wachovia's banking subsidiaries in receivership if an agreement was not signed
by the end of the day on October 3 was based on discussions with regulatory
authorities, its knowledge of Wachovia's financial condition, and the approach
being taken by the regulatory authorities in their interactions with Wachovia.
The Wachovia board took action with respect to the Wells Fargo proposal,
when pending legislation known as "The Emergency Economic Stabilization Act of
2008" had not yet been acted upon by the House of Representatives, because
management advised the board that it believed that, unless an agreement was
signed by the end of the day on October 3, the FDIC was prepared to place
Wachovia's banking subsidiaries in receivership over the coming weekend, and
there was no assurance either that the House of Representatives would approve
the proposed legislation or that the proposed legislation, if approved by
Congress and signed into law, would offer Wachovia a viable alternative to
receivership because of uncertainty as to both the substance and timing of
implementation.
Wachovia's Financial Advisors
The following disclosure supplements the discussion at page 40 of the
proxy statement concerning the financial analyses of Goldman Sachs:
Goldman Sachs did not perform certain analyses that it customarily would
have prepared for Wachovia in connection with a fairness opinion because
analyses of the kind that are often performed, such as a comparable
transaction analysis, a contribution analysis or a discounted cash flow
analysis, were not meaningful as a result of the extraordinary circumstances
facing Wachovia as described in Goldman Sachs' opinion.
The following disclosure supplements the discussion at page 41 of the
proxy statement concerning the scope of the review conducted by Goldman Sachs:
Goldman Sachs did not make an independent evaluation or appraisal of any
of the assets and liabilities (including any contingent, derivative or off-
balance-sheet assets and liabilities) of Wachovia or Wells Fargo or any of
their respective subsidiaries, and it was not furnished with any such
evaluation or appraisal.
The following disclosure supplements the discussion at page 41 of the
proxy statement concerning Goldman Sachs' comparative analysis of Wells Fargo
trading multiples:
The October 2, 2008 Price to Estimated Earnings multiples of Wells Fargo
and the selected national and regional banks were based on IBES earnings
estimates.
The following disclosure supplements the discussion at page 46 of the
proxy statement concerning the financial analyses of Perella Weinberg:
Perella Weinberg did not perform certain analyses that it customarily
would have prepared for Wachovia in connection with a fairness opinion because
analyses of the kind that are often performed, such as a comparable company
analysis or a discounted cash flow analysis, were not meaningful as a result
of the extraordinary circumstances facing Wachovia as described in Perella
Weinberg's opinion.
The following disclosure supplements the discussion at page 47 of the
proxy statement concerning the scope of the review conducted by Perella
Weinberg:
In addition, Perella Weinberg did not review individual credit files nor
did it make an independent evaluation or appraisal of any of the assets and
liabilities (including any contingent, derivative or off-balance-sheet assets
and liabilities) of Wachovia or Wells Fargo or any of their respective
subsidiaries, and it was not furnished with any such evaluation or appraisal.
The following disclosure supplements the discussion at page 49 of the
proxy statement concerning Perella Weinberg's analyses of Wells Fargo common
stock based on trading multiples that Perella Weinberg considered appropriate:
The companies that Perella Weinberg reviewed in determining the
appropriate trading multiple ranges were as follows: National Banks: Bank of
America Corporation, JPMorgan Chase & Co. and Citigroup Inc.; Regional Banks:
U.S. Bancorp, PNC Financial Services Group, Inc., BB&T Corporation, Capital
One Financial Corporation, SunTrust Banks, Inc., M&T Bank Corporation, Regions
Financial Corporation, Fifth Third Bancorp, National City Corporation, KeyCorp
and Marshall & Ilsley Corporation.
About Wachovia
Wachovia Corporation (NYSE: WB) is one of the nation's largest diversified
financial services companies, with assets of $764.4 billion and market
capitalization of $7.6 billion at September 30, 2008. Wachovia provides a
broad range of retail banking and brokerage, asset and wealth management, and
corporate and investment banking products and services to customers through
3,300 retail financial centers in 21 states from Connecticut to Florida and
west to Texas and California, and nationwide retail brokerage, mortgage
lending and auto finance businesses. Globally, clients are served in selected
corporate and institutional sectors and through more than 40 international
offices. Our retail brokerage operations under the Wachovia Securities brand
name manage more than $1.0 trillion in client assets through 14,600 financial
advisors in 1,500 offices nationwide. Online banking is available at
wachovia.com; online brokerage products and services at wachoviasec.com; and
investment products and services at evergreeninvestments.com.
INFORMATION ABOUT THE MERGER
In connection with the proposed merger with Wachovia Corporation, Wells
Fargo & Company has filed with the Securities and Exchange Commission ("SEC"),
among other relevant documents, a registration statement on Form S-4 that
includes a proxy statement of Wachovia that also constitutes a prospectus of
Wells Fargo. Wachovia has mailed the proxy statement-prospectus to its
shareholders. Wachovia shareholders and other investors are urged to read the
final proxy statement-prospectus because it describes the proposed merger and
contains other important information. You may obtain copies of all documents
filed with the SEC regarding the proposed merger, free of charge, at the SEC's
website (www.sec.gov). You may also obtain free copies of these documents by
contacting Wells Fargo or Wachovia, as follows:
Wells Fargo & Company, Investor Relations, MAC A0101-025, 420 Montgomery
Street, 2nd Floor, San Francisco, California 94104-1207, (415) 396-3668.
Wachovia Corporation, Investor Relations, One Wachovia Center, 301 South
College Street, Charlotte, North Carolina 28288, (704) 374-6782.
Wells Fargo and Wachovia and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
Wachovia Corporation shareholders in connection with the proposed merger.
Information about Wells Fargo's directors and executive officers and their
ownership of Wells Fargo common stock is contained in the definitive proxy
statement for Wells Fargo's 2008 annual meeting of stockholders, as filed by
Wells Fargo with the SEC on Schedule 14A on March 17, 2008. Information about
Wachovia's directors and executive officers and their ownership of Wachovia
common stock is contained in the definitive proxy statement for Wachovia's
2008 annual meeting of shareholders, as filed by Wachovia with the SEC on
Schedule 14A on March 10, 2008. You may obtain a free copy of these documents
by contacting Wells Fargo or Wachovia at the contact information provided
above. The proxy statement-prospectus for the proposed merger provides more
information about participants in the solicitation of proxies from Wachovia
Corporation shareholders.
