- The Washington Times - Wednesday, February 19, 2003

CHARLOTTE, N.C., Feb. 19 (UPI) — Wachovia Corp., the nation's fourth-largest bank, said Wednesday it has reached an agreement to acquire Prudential Financial Inc.'s retail brokerage business.

When completed, Wachovia said the deal will create the nation's third-largest broker by assets, with 3,500 locations nationwide.

Financial terms of the deal were not disclosed.

Wachovia would own 62 percent of the newly created firm, with Prudential holding the remaining 38 percent.

The new company, which will take restructuring and merger-related charges of about $681 million over the 18-month integration period, will have combined client assets of $537 billion and 2002 estimated combined net revenue of $4.2 billion.

Between Prudential's brokerage arm, Prudential Securities, and Wachovia, the group would have 791 retail offices in 48 states and the District of Columbia and more than 13,000 brokers, compared with 14,000 at Merrill Lynch & Co. and about 12,700 at Citigroup Inc. unit Smith Barney.

Daniel Ludeman, currently president and chief executive officer of Wachovia Securities, will be the president and CEO of the new firm, and Prudential's John Strangfeld will be chairman.

The deal, which is anticipated to close in the third quarter, is expected to be accretive to the earnings per share of both companies in the first full year following the closing, not including the effect of one-time charges. The transaction also provides attractive internal rates of return.

The new firm will be headquartered in Richmond, Virginia and the brokerage operations will continue doing business under their current names until integration is complete and then will operate as Wachovia Securities.

Donald A. McMullen, Jr., president of Wachovia's Capital Management Group, said, "We are extremely enthusiastic about the formation of this new financial advisor powerhouse.

"This creates one of the nation's leading retail brokerage platforms, with a major national market presence, excellent growth prospects and a shared vision of putting the client first. This transaction is a clear indication of Wachovia's commitment to its stated strategy of expanding retail distribution as a competitive advantage while generating rapid and attractive financial returns," McMullen said.

Strangfeld said, "Our two firms are a great fit. This new company makes sense because it gives us the scale necessary to compete and because both parent companies share an investor-focused strategy."

Wachovia, which was created through the September 1, 2001, merger of First Union and Wachovia, has assets of $342 billion, assets under management and administration of $802 billion. It operates banking offices under the First Union and Wachovia names in 11 East Coast states and Washington, D.C., and offers full-service brokerage with offices in 48 of the 50 states.

Prudential Financial companies, with approximately $556 billion in total assets under management serves individual and institutional customers worldwide.

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