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Wachovia, Prudential form brokerage entity
By CBS.MarketWatch.com
Last Update: 8:21 AM ET Feb. 19, 2003
NEW YORK (CBS.MW) -- Wachovia Corp. and Prudential Financial confirmed plans Wednesday to combine their retail brokerage operations.
The deal will give rise to the third-largest U.S. brokerage as measured by assets, the parties said. It's expected to be completed in the third quarter.
Wachovia (WB: news, chart, profile) will hold a 62 percent stake in the combined broker entity, which will be headquartered in Richmond, Va. Top Wachovia executives will head the entity.
Wachovia and Prudential (PRU: news, chart, profile) said the deal will add to their respective earnings in the first full year following closing.
Earlier, a story in the online edition of the Wall Street Journal said that Wachovia would acquire 4,400 retail brokers, bringing the total size of its sales force to more than 13,000.
The companies' announcement didn't specify the number of brokers involved in the deal, saying instead that the combined entity would have assets of $537 billion as well as 2002 estimated net revenue of $4.2 billion. In addition, it will have more than 3,500 brokerage locations serving 48 states and the District of Columbia.
The Journal said the final agreement follows months of negotiations and at one point the two companies had considered a joint venture to combine their brokerage and research operations but they could not agree which company would control the venture.
Also according to the Journal, Prudential will retain its stock-research business.
"We are extremely enthusiastic about the formation of this new advisor powerhouse," said Donald McMullen, president of Wachovia's capital management group, in a statement. Wachovia Securities' Daniel Luderman will oversee the new entity and report to McMullen.
In Tuesday's action, shares of Wachovia added 65 cents to close at $35.65 while Prudential Financial rose 20 cents to $30.92.
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