First Union announced this morning that it is buying Wachovia Corp. and adopting its corporate identity. First Union Corp. will become Wachovia Corp., and First Union Securities will be renamed Wachovia Securities, officials said during a conference call this morning.
“After all the negative experiences that First Union had last year, I have to believe that maybe taking the Wachovia name is probably a good long-term strategy if this firm ever plans to have a national presence,” says a First Union broker who asked to remain anonymous.
First Union Corp. Chairman Ken Thompson said during the call that the merger will result in "increased cross-selling opportunities on both sides of the business."
He added that First Union is determined to grow its wealth management business under the new Wachovia banner, possibly increasing net income by as much as 15% annually through cross-selling and possibly through more brokerage acquisitions in the future.
Wachovia Corp. Chairman L.M. "Bud" Baker said that the combination of Wachovia and First Union Securities will result in the creation of a super-regional brokerage firm that could become the "premier wealth management company in America."
Several times during the conference call, Thompson emphasized that the firm is preparing for a "flawless" integration process that will be carefully and gradually implemented as Wachovia and First Union operations are merged over the course of the next three years. "I can't emphasize this enough," he said.
First Union brokers say the firm has encountered problems in integrating the old Everen Securities’ and First Albany’s back offices into First Union.
Wachovia Securities brings 600 registered reps to the deal, according to a spokesperson for First Union Securities. Its brokerage operations include the former Interstate Johnson/Lane business, which it bought in April 1999. When combined, First Union and Wachovia Securities will have 8,350 retail brokers in 600 retail branches and 133 offices, mostly located along the Eastern seaboard.
First Union is payout about $13 billion in stock for Wachovia. A broker with IJL Wachovia in Richmond, Va., said that brokers in his office have not received details about how the brokerage businesses will be combined, and said the merger announcement came as quite a surprise to the producers in his branch, especially since First Union plans to take the Wachovia name.
"It is a bit unusual," said the broker. "But Wachovia does have a good, strong name here in the Southeast."
Wachovia is a regional banking firm based in Winston-Salem, N.C. First Union Corp. is headquartered in Charlotte. A hiring freeze has been implemented at both firms, officials said during the conference call. The deal is expected to close in the third quarter of this year.
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