Administration September 6, 2005

Wachovia Agrees to Acquire SouthTrust in Stock Swap

June 21, 2004 (PLANSPONSOR.com) - Banking giant Wachovia Corp. is picking up competitor SouthTrust Corp. as part of a $14.3-billion stock swap deal.

Reported by

Fred Schneyer

After combining with the Birmingham, Alabama-based SouthTrust, the new entity will have $464 billion in assets and market capitalization of $76 billion, and will keep its spot as the nation’s fourth largest bank in terms of assets, according to news reports. Wachovia currently has $411 billion in assets, with banking operations in 11 eastern states and Washington, D.C. SouthTrust has $52.7 billion in assets and does business in nine southern states.

By creating the largest Southeastern U.S. bank, the deal is expected to give the Charlotte, North Carolina-based Wachovia a whole new level of competitive leverage in the lucrative Texas market, the report said.

The deal calls for Wachovia to exchange 0.89 shares of its common stock for each share of SouthTrust. The $14.3-billion valuation is based on Wachovia’s closing stock price of $47 on Friday.

“This transaction gives us clear leadership in a number of attractive, high-growth states, and extends our reach into new southeastern and southwestern states,” Ken Thompson, Wachovia’s chairman, president and CEO, said in a written statement posted to both bank’s Web sites .

The companies said they expect the integration to take 15 months, a process that is likely to cost $431 million after taxes. After that, the transaction should generate $255 million in annual after-tax cost reductions, the companies said.

Wallace Malone, chairman and CEO of SouthTrust, will become vice chairman of Wachovia once the transaction is complete. He and two other members of SouthTrust’s board of directors will join the Wachovia board. The transaction is expected to close in fourth quarter of this year.

Both companies have retirement plan operations with Wachovia’s offerings based in its Retirement Services Group while SouthTrust’s had been centered in SouthTrust Asset Management. There was no immediate word Monday about the effects of the deal on the merged firm’s plan services. According to the 2004 PLANSPONSOR DC Recordkeeping survey, Wachovia had 2,838 DC plans, including 2,719 that had between one and 1,000 participants. Wachovia uses the WySTAR RK platform.