Wells Fargo 2009 Annual Report Download - page 111

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December 31,
2008 December 31,
(in millions) (final) Refinements 2008
Purchase price:
Value of common shares $ 14,621 — 14,621
Value of preferred shares 8,409 — 8,409
Other (value of share-based awards and direct acquisition costs) 62 —62
Total purchase price 23,092 — 23,092
Allocation of the purchase price:
Wachovia tangible stockholders’ equity, less prior purchase accounting
adjustments and other basis adjustments eliminated in purchase accounting 19,387 (7) 19,394
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Loans and leases, net (18,033) (1,636) (16,397)
Premises and equipment, net (972) (516) (456)
Intangible assets 14,675 (65) 14,740
Other assets (2,972) 472 (3,444)
Deposits (4,577) (143) (4,434)
Accrued expenses and other liabilities (exit, termination and other liabilities) (4,466) (2,867) (1,599)
Long-term debt (227) (37) (190)
Deferred taxes 9,365 2,689 6,676
Fair value of net assets acquired 12,180 (2,110) 14,290
Goodwill resulting from the merger $ 10,912 2,110 8,802
On December 31, 2008, we acquired all outstanding shares
of Wachovia common stock in a stock-for-stock transaction.
Wachovia, based in Charlotte, North Carolina, was one of
the nation’s largest diversified financial services companies,
providing a broad range of retail banking and brokerage,
asset and wealth management, and corporate and investment
banking products and services to customers through 3,300
financial centers in 21 states from Connecticut to Florida and
west to Texas and California, and nationwide retail brokerage,
mortgage lending and auto finance businesses. In the merger,
we exchanged 0.1991 shares of our common stock for each
outstanding share of Wachovia common stock, issuing a total
of 422.7 million shares of our common stock with a December 31,
2008, value of $12.5 billion to Wachovia shareholders. Shares
of each outstanding series of Wachovia preferred stock were
converted into shares (or fractional shares) of a corresponding
series of our preferred stock having substantially the same
rights and preferences. Because the acquisition was completed
at the end of 2008, Wachovia’s results of operations for 2008
are not included in our income statement.
The assets and liabilities of Wachovia were recorded at
their respective acquisition date fair values, and identifiable
intangible assets were recorded at fair value. Because the
transaction closed on the last day of the annual reporting
period, certain fair value purchase accounting adjustments
were based on data as of an interim period with estimates
through year end. Accordingly, we have re-validated, and,
where necessary, have finalized our purchase accounting
adjustments. The impact of all finalized purchase accounting
adjustments were recorded to goodwill and increased good-
will by $2.1 billion in 2009. This acquisition was nontaxable
and, as a result, there is no tax basis in goodwill. Accordingly,
none of the goodwill associated with the Wachovia acquisition
is deductible for tax purposes. Additional exit reserves related
to costs associated with involuntary employee termination,
contract termination penalties and closing duplicate facilities
were recorded during 2009 as part of the further integration
of Wachovia’s employees, locations and operations.
The final allocation of purchase price at December 31,
2008, is presented in the following table.
Note 2: Business Combinations