Shareholders OK Wachovia Corp., Golden West Merger

Wachovia Corp. (WB) and Golden West Financial Corp. (GDW) easily won shareholder approval on Thursday for their merger, which would combine the fourth-largest U.S. bank with the No. 2 U.S. savings and loan.

The acquisition of Oakland, California-based Golden West would give Wachovia its first significant branch presence on the U.S. West Coast, and significantly expand its mortgage operations. Wachovia is based in Charlotte, North Carolina.

Regulators still must approve the deal.

At separate shareholder meetings, about 93 percent of Wachovia shares cast and 99 percent of Golden West shares cast voted in favor of the merger, representatives for the companies said.

The companies valued the merger at $25.5 billion when they announced it in May and expect it to close in the fourth quarter. Golden West shareholders would receive 1.051 Wachovia shares and $18.65 in cash for each of their shares.

Many investors and analysts have criticized Wachovia Chief Executive Ken Thompson's decision to buy Golden West, citing an expected housing slowdown, and possible problems in converting a thrift into a full-service bank. The merger's value by Wednesday had fallen to about $24.1 billion.

"We're still concerned about the integration," said William Harper, chief investment officer of South Carolina's Greenwood Capital Associates LLC, which owns Wachovia shares. "It also appears the (real estate) bubble is pretty well peaking out."

Golden West specializes in adjustable-rate mortgages, and operates 285 World Savings Bank branches in 10 states. Septuagenarians Herbert and Marion Sandler have run the thrift for 43 years. Wachovia operates 3,109 banking offices.

On August 15, Golden West said loan originations in July fell 15 percent and credit quality declined to a two-year low. Deposits, however, rose $880 million from June, suggesting that the thrift is adding customers.

"As the market gets the proper information, as the market puts the two companies together, they are beginning to understand what we saw in it," Thompson said in an interview published Thursday in the Charlotte Observer. "Strategically, we think being in the mortgage business in the United States is a winning bet."

In Thursday afternoon trading, Golden West shares fell 70 cents to $75.38, and Wachovia shares fell 65 cents to $54.61.