Sunday, April 13, 2008

Wachovia is hammering out the final terms on a deal to inject $6 - $7 billion from outside investor.

While final terms of the deal still were being hammered out Sunday night, the fifth-largest U.S. bank in stock-market value is expected to get $6 billion to $7 billion, with the Charlotte, N.C., company selling its shares to the investor group for roughly $23 to $24 apiece. That price represents a discount of more than 15% to Wachovia's share price on Friday.

Wachovia, led by Chairman and Chief Executive G. Kennedy Thompson, is structuring its capital infusion in a similar fashion to what Washington Mutual Inc. employed last week when it raised roughly $7 billion from buyout firm TPG (please see Breakingviews analysis). Instead of going to shareholders exclusively, banks and Wall Street firms are looking for a third-party vote of confidence, a role that so-called sovereign-wealth funds and private-equity groups have been eager to play.

Let's see if they cut their dividend tomorrow also.

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