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Wachovia grabs another
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June 24, 1997: 11:14 a.m. ET
$2.3 billion Central Fidelity purchase makes bank No. 1 in Virginia
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NEW YORK (CNNfn) - Wachovia Corp. said on Tuesday it will acquire Central Fidelity Banks Inc. of Richmond, Va. for $2.3 billion, marking its second major purchase within a month.
Wachovia announced on June 10 that it will buy Jefferson Bankshares Inc. based in Charlottesville, Va., for $542 million. Combined with the latest deal Wachovia, with $9.9 billion in deposits, surpasses NationsBank Corp. with $9.7 billion as the largest bank in Virginia.
"Central Fidelity has an impressive franchise throughout Virginia," said Wachovia president and chief executive, Leslie M. Baker Jr. Wachovia is based in Winston-Salem, N.C.
The deal underscores Wachovia's conservative game plan in catching up with the overall trend of industry consolidation, analysts said.
"They like to put their toe on the bridge before they put their foot on the bridge," said John Mason, banking analyst at Interstate/Johnson Lane.
"You had a change two years ago in the chief executive, so you had a change at the top in terms of direction. He is a careful man but favors expansion," Mason said.
In a joint statement, the companies said Central Fidelity shareholders will receive 0.63 Wachovia shares for each common share held. Based on Wachovia's closing stock price as of June 23, the transaction is valued at about $39.45 a share. The transaction is structured as a tax-free, pooling of interests.
The news sent shares of Central Fidelity (CFBS) skyrocketing on Tuesday, up 5-7/8 at 37-3/4 in Nasdaq trading. Wachovia's stock (WB) was down 1 at 61-5/8 on the New York Stock Exchange.
The agreement is subject to the approval of shareholders and appropriate regulatory agencies. The merger is expected to close in the fourth quarter. If consummated, the merger is expected to have a positive impact on Wachovia's earnings in 1999.
-- Robert Liu
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Wachovia
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