NEW OWNER

New York, Oct. 3: In a surprise twist, West Coast bank Wells Fargo & Company said it had reached an agreement to acquire rival firm Wachovia Corporation for about $15.1 billion in stock.

The announcement came just four days after Citigroup had agreed to buy Wachovia’s banking operations for $2.2 billion for about $1 a share.

However, Wachovia, which is based in Charlotte, has now rejected that deal in favour of one where the entire company would be acquired.

San Francisco-based Wells Fargo said the deal required no assistance from the Federal Deposit Insurance Corporation or any other government agency. The bank plans to raise up to $20 billion by issuing shares, primarily common stock.

Under the terms of the agreement, which has been approved by directors of each company, Wachovia shareholders will receive 0.1991 shares of Wells Fargo stock in exchange for each share of Wachovia stock.

The transaction, based on Wells Fargo’s closing stock price of $35.16 on Thursday, is valued at $7 a share.

The agreement requires the approval of Wachovia shareholders and regulators.

“This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support,” Wachovia chief executive Robert K. Steel said in a statement.

Citigroup said in a statement that Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an exclusivity pact it had reached with the country’s fourth largest bank.

“Wells Fargo’s conduct constitutes tortious interference with the exclusivity agreement,”the statement said.