RESEARCH TRIANGLE PARK, N.C. — Try to put yourself in the cubicle alongside a Wachovia employee as you find out your company is being sold – again – for the second time in a week.

You open your e-mail Friday morning and – boom – there it is.

“To say the least, this has been an extraordinary week,” begins the e-mail from Wachovia Chief Executive Officer Robert Steel, “and last night an important development occurred: Wells Fargo & Co. and Wachovia signed a definitive agreement to merge in a transaction in which Wells Fargo will acquire Wachovia Corp. in its entirety without government assistance.”

Of course, the Wells Fargo deal turned out to be a great deal less “definitive” than Steel wrote. Before noon, Citi, which had agreed to buy Wachovia four days earlier, cried foul over the Wells Fargo deal. Now the ownership battle is in court.

How this matter will shake out, no one knows right now. The Wall Street Jornal reported today that Wachovia may end up being split among new owners.

Meanwhile, Wachovia employees and shareholders hold their collective breath to see what will happen.

To help you better understand the turmoil within Wachovia, read Steel’s letter. The video conference he alludes to did take place – and turned into quite a news story when Steel and Wells fargo execs were hit with the news that Citi had cried foul. (We discussed the call at length in Friday’s Skinnny).

What follows is Steel’s e-mail as provided to

DATE: Oct. 3, 2008
TO: All Wachovia Colleagues
FROM: Robert K. Steel, CEO
RE: Wells Fargo Combination

"To say the least, this has been an extraordinary week, and last night an important development occurred: Wells Fargo & Company and Wachovia signed a definitive agreement to merge in a transaction in which Wells Fargo will acquire Wachovia Corporation in its entirety without government assistance.

"As you know, prior to this agreement with Wells Fargo, we had planned to sell our General Bank, Wealth Management and Corporate and Investment Banking group to Citigroup; this left the Wachovia Securities retail brokerage, Evergreen Investments, Wachovia Retirement Services and Wachovia Insurance Services with Wachovia Corp.

"However, we believe that this agreement that Wells Fargo presented last night, and which the Wachovia board of directors has now approved, is a compelling value for all our constituencies – our shareholders, our colleagues, our customers and our communities.

"We believe that the combined company will be an anchor of strength and stability amid a dramatically changing industry landscape. Wells Fargo is the only bank in the U.S. to receive the highest possible credit ratings from Standard and Poor’s Rating Services and Moody’s Investor Services.

"This proposed combination creates a unique industry franchise that spans from coast to coast and represents exceptionally strong leadership in financial services. Our new company will have banking operations in 39 states and the District of Columbia, with No. 1 deposit share in 17 of those states.

"The merger is a stock-for-stock transaction, with each share of Wachovia common stock being exchanged for 0.1991 shares of Wells Fargo common stock, representing a value of $7 per share, based on Wells Fargo’s closing stock price on Oct. 2, 2008. The transaction is expected to close by year-end.

"Three members of the Wachovia board of directors will join the Wells Fargo board upon completion of the transaction. The company’s East Coast retail and commercial/corporate banking businesses will be headquartered in Charlotte. The company’s brokerage operations will be headquartered in St. Louis.

"We understand that you have many questions, and we will work diligently over the next weeks and months to get answers. As we work through integration plans together and thoughtfully, we will keep you informed.

"You can learn more details about the transaction on Pulse, where we have posted the full press release, a fact sheet and other helpful information. You can also listen to the investor call, audio only, by tuning to the Video Network starting at 9:30 a.m. Eastern time this morning.

"Thank you for your commitment and support through this unprecedented time as together, we move toward a stable and promising future."