Wachovia Corp. has agreed to purchase Irvine, California-based Westcorp for $3.42 billion to expand its auto finance group into a national business with offices in 47 states.
Westcorp owns 84% of WFS Financial Inc. Wachovia also will acquire for $490 million the 16% of WFS Financial held by the public.
The transaction will more than double the size of Wachovia’s dealer financial services business, making it the nation’s ninth largest auto loan originator. As a result of this transaction, Wachovia will add about 8,500 automobile dealer clients, approximately 920,000 individual customers and 19 retail banking offices in Southern California.
“This transaction moves our auto finance business to a new level and gives us access to a new set of customers who can benefit from Wachovia’s broad offering of financial services,” said Ben Jenkins, president of Wachovia’s General Bank. “Westcorp and WFS Financial have demonstrated a strong track record of growing revenue and earnings through all economic cycles. Our companies share the same strong commitment to customer service and delivering superior products to auto finance customers.”
The combined auto finance business will be based in Irvine and run by WFS Financial’s President and Chief Executive Officer, Thomas Wolfe, who will report to Carlos Evans, head of Wachovia’s Wholesale Banking. Following completion of the merger, David Stevens, who runs Wachovia’s Dealer Financial Services unit, will become head of East Coast operations, overseeing national wholesale lending, specialized lending and the Dealer Service Center in Greenville, N.C. Bill Katafias, National Production Manager of WFS Financial, will become head of West Coast operations and National Retail Sales Executive, overseeing retail production. Both Stevens and Katafias will report to Wolfe.
“Joining forces with Wachovia will benefit both our customers and our shareholders,” said Ernest S. Rady, chairman of Westcorp. Rady will serve as chairman of Wachovia’s dealer financial services business and chairman of California banking operations, reporting to Jenkins. “Together we’ll have more to offer clients and a broader financial base on which to grow. I am very pleased to be joining Westcorp with Wachovia and believe our combined growth prospects will outpace the industry.”