Charlotte, N.C.-based Wachovia Corp. said it plans to buy Irvine-based auto lender Westcorp for $3.4 billion.
Wachovia also will buy the 16% of Irvine’s WFS Financial Inc. that Westcorp doesn’t own for $490 million.
The acquisition isn’t a surprise. In late August, Westcorp said it was in talks about a possible “business combination” as its own plan to restructure the finance company was stalled at the hands of regulators.
Westcorp said it has retained Credit Suisse First Boston as an adviser. Reports at the time named Wachovia as a possible buyer.
For the past year, Westcorp had been trying to reorganize as a bank holding company to allow more flexibility in how it operates. Part of the plan includes buying the remaining 16% of WFS Financial.
Westcorp had gained some approvals for the restructuring but saw the plan delayed by the Federal Reserve.
Wachovia’s buy of Westcorp will make it the ninth-biggest auto lender in the U.S.
“Westcorp and WFS Financial have demonstrated a strong track record of growing revenue and earnings through all economic cycles,” said Ben Jenkins, president of Wachovia’s General Bank.
The combined auto finance business will be based in Irvine and run by WFS Financial Chief Executive Thomas Wolfe.
Westcorp Chairman Ernest S. Rady will become chairman of Wachovia’s dealer financial services business and chairman of California banking operations, reporting to Jenkins.
Another WFS Financial executive set to take a post with Wachovia is Bill Katafias, national production manager of WFS Financial, who will become head of West Coast operations and national retail sales executive, overseeing retail production. He will report to Wolfe.
The deal is set to close in the first quarter of 2006.
