Notable Mergers and Acquisitions of the Day 10/3: WFC/WB, GRMN, MO/UST

October 3, 2008 10:04 AM EDT

• Wells Fargo & Company (NYSE: WFC) and Wachovia Corporation (NYSE: WB) signed a definitive agreement for the merger of the two companies including all of Wachovia's banking operations in a whole company transaction requiring no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
  
  Under terms of the agreement, which has been approved unanimously by the boards of both companies, Wachovia shareholders will receive 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock. The transaction, based on Wells Fargo's closing stock price of $35.16 on October 2, 2008, is valued at $7.00 per Wachovia common share for a total transaction value of approximately $15.1 billion.
  
  Wells Fargo will record Wachovia's credit-impaired assets at fair value. The acquisition is expected to exceed Wells Fargo's internal rate of return goal and add to Wells Fargo's earnings per share in the first year of operations, excluding integration costs, write-downs, transaction charges, and credit reserve build. Wells Fargo expects to incur merger and integration charges of approximately $10 billion. To maintain its strong capital position, Wells Fargo intends to issue up to $20 billion of new Wells Fargo securities, primarily common stock.
  
  
• Garmin Ltd. (NASDAQ: GRMN) announced that it has signed a letter of intent for the proposed acquisition of Sportmanship International AB, the distributor of Garmin's consumer products in Sweden. The completion of the acquisition is subject to the negotiation and execution of a definitive acquisition agreement, the completion of legal and financial due diligence and customary closing conditions. The acquisition is expected to be completed in December 2008.
  
  Financial terms of the proposed transaction were not released. Following the acquisition, Sportmanship is expected to change its name to Garmin Sweden AB. The company will retain its management, sales, marketing and supporting staff, consisting of approximately 28 people.
  
  
• Altria Group (NYSE: MO) and UST (NYSE: UST) announced that the companies have amended the September 7, 2008 agreement pursuant to which Altria has agreed to acquire all outstanding shares of UST.
  
  The amendment sets forth Altria's and UST's agreement to extend, at Altria's option, the closing date of the transaction to a date that is no later than early January 2009 in the event conditions for closing are met prior to the end of 2008. While Altria currently has fully committed financing to complete the transaction, Altria's lenders advised that it would be preferable to close the transaction in 2009. The parties also agreed to increase the "reverse termination fee" from $200 million to $300 million under certain circumstances, which are detailed in the amendment. In addition to the regulatory review process, completion of the transaction remains subject to UST shareholder approval and certain other customary closing conditions. The agreement and the amendment are filed with the Securities and Exchange Commission on September 8 and October 3, respectively.

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