The combined company, which will provide corporate banking, retail banking, asset and wealth management, capital markets and securities brokerage services and products, will have $222 billion in assets under management, including mutual fund assets of $96 billion, according to the companies. The combined company will be known as Wachovia Corporation. Its headquarters will be in Charlotte.
Wachovia shareholders will receive two shares of First Union stock for each share of Wachovia stock. In addition, Wachovias board is expected to approve a 48 cents per share dividend prior to closing. The closing is expected to occur in the third quarter.
L.M. Baker Jr., chairman, president and CEO of Wachovia, will become chairman of the new entity. G. Kennedy Thompson, chairman, president and CEO of First Union, will become president and CEO of the new company. The board of directors of the new company will be equally divided, with nine directors coming from First Union and nine coming from Wachovia. In a joint tele-conference, the companies announced their intention to place greater emphasis in the future on asset and wealth management, including mutual funds and annuities.
Investor reactions to the announcement were mixed. In early afternoon trading, shares of First Union stock were trading off approximately 4.75 percent, while shares of Wachovia were trading up about three percent.