MEDIA INVESTORS
Larry Haeg Kim Kellogg Robert S. Strickland Cindy Koehn
Norwest Corporation Wells Fargo Norwest Corporation Wells Fargo
612-667-7043 415-396-3606 612-667-7919 415-393-3099
WELLS FARGO AND NORWEST TO MERGE
San Francisco and Minneapolis, June 8, 1998 -- Wells Fargo & Company
(NYSE: WFC) and Norwest Corporation (NYSE: NOB) said today they have signed a
definitive agreement for a merger of equals to create the Western Hemisphere's
most extensive and diversified financial services network.
The combined company will have $191 billion in assets, more than 90,000
employees, more than 20 million customers, and 5,777 financial services stores
in all 50 states, Canada, the Caribbean, Latin America and elsewhere
internationally.
The transaction is valued at approximately $34 billion. Common
stockholders of Wells Fargo will receive 10 shares of common stock of Norwest in
exchange for each share of Wells Fargo common stock. After the exchange, it is
expected that Wells Fargo stockholders will own approximately 52.5 percent of
the combined companies and Norwest stockholders approximately 47.5 percent.
Norwest's dividend will remain the same.
When the merger is completed, Paul Hazen, chairman and chief executive
officer of Wells Fargo, will become chairman of the new organization. Richard M.
Kovacevich, chairman and chief executive officer of Norwest, will become
president and
chief operating officer of Norwest, and Rod Jacobs, president of Wells Fargo,
will continue in their current positions until the merger is completed and will
head the transition team that will recommend the organizational structure of the
new company.
"We believe the partnership of these two companies offers terrific
opportunities for customers, employees, and shareholders," said Hazen. "The
possibilities and power of this combination offer a tremendously exciting vision
for our future."
"This merger of equals will bring together two high performing
companies with complementary businesses, products, technology, markets and
customers," said Kovacevich. "It will be a leading franchise in the western
United States with all the resources necessary to meet all of our customers'
financial needs and serve them when, where and how they want to be served."
"In addition to our nationwide presence in mortgage and our presence
across the Americas in consumer finance," added Kovacevich, "our combined
banking franchise will have a top four market share in 16 of our 21 banking
states across the Midwest, Rocky Mountain and Western regions. We'll have the
largest number of financial services stores in the nation. Wells Fargo's
leadership in alternative delivery is a perfect complement to Norwest's
leadership in community banking."
"By sharing successful best practices across our two companies," said
Hazen, "we can take advantage of the unique strengths of both organizations to
serve our customers better and deliver even greater shareholder value. This
merger will result in a
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dynamic new organization that is geographically diverse and focused on
delivering long term benefits for our stockholders, customers, team members and
communities."
The merger is expected to be accounted for as a pooling of interests,
to be completed in the second half of this year and to be a tax-free
reorganization for federal income tax purposes. The merger has been approved by
both companies' boards, requires regulatory and stockholder approval, is
expected to break even on a GAAP (Generally Accepted Accounting Principles)
basis and to add to cash earnings per share for stockholders of both companies
in the first year of operation, excluding transaction costs.
The new name of the combined companies will be Wells Fargo & Company,
one of the most widely known brand names in the financial services industry.
The corporate headquarters of the combined company will be in San
Francisco. Minneapolis will be headquarters for the combined Midwest banking
business.
"The question of where to locate the headquarters of the new
organization was perhaps the most difficult part of this process," said
Kovacevich. "Since the new organization will have $54 billion in deposits in
California and only $13 billion in deposits in Minnesota, it makes sense for the
corporate headquarters to be closest to the highest concentration of customers
and that's California."
"Of the more than 90,000 team members who will make up the new
organizations, only 2,130 headquarters staff in San Francisco and Minneapolis,
or 2.3 percent of the 90,000, will be directly affected by this headquarters
decision."
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"To manage this process, both companies have instituted an immediate
hiring freeze," said Hazen. "Through natural turnover, growth, a good economy,
and our commitment to 'retain and retrain' as many affected team members as
possible, our goal is to offer as many opportunities as we can to headquarters
team members for comparable positions in the combined company either in the Twin
Cities area, San Francisco or elsewhere so they can continue their careers with
the company. Also, because technology today creates the advantage of 'virtual
offices,' some corporate functions could remain in Minneapolis."
Merger details include:
o Wells Fargo has granted Norwest an option to purchase, under
certain circumstances, up to 19.9 percent of Wells Fargo's
outstanding shares of common stock. In addition, Norwest has
granted Wells Fargo an option to purchase, under certain
circumstances, up to 19.9 percent of Norwest's outstanding
shares of common stock.
o The two companies estimate there will be approximately $950
million in transition-related expenses and expect to achieve
at least $650 million in cost savings by the third year of
operation. The new company will:
o rank 1st in financial services stores in the western hemisphere,
o rant 1st in mortgage originations and servicing,
o rank 1st in internet banking,
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o rank 1st in agricultural lending among U.S. banks,
o rank 2nd in the number of small business loans among U.S. banks,
o rank 2nd in the number of ATMs in the U.S.,
o rank 4th in middle-market lending among all banks,
o rank 3rd among all banks in mutual funds under management,
o rank 4th in market capitalization among U.S. bank holding
companies,
o rank 7th in assets among U.S. bank holding companies,
o continue to be the nation's leading commercial real estate leader,
o be an industry leader in alternative banking strategy, as
developed by Wells Fargo,
o be an industry leader in community banking strategy, as developed
by Norwest Banks,
o have the Americas' premier consumer finance company, through
Norwest Financial,
o have the largest bank-owned insurance agency.
3/31/98 Norwest Wells Fargo Combined
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Assets (billions) $ 96.1 $ 94.8 $ 190.9
Loans (billions) $ 44.2 $ 64.5 $ 108.7
Income (billions -1997) $ 1,351 $ 1,155 $ 2,506
Revenue (billions - 1997) $ 9.659 9.608 $ 19.267
Deposits (billions) $ 57.8 $ 72.3 $ 130.1
Customers (millions) 9.9 10 19.9
Mortgage originations (billions) $ 60 -- $ 60
Mortgage Servicing (billions) $ 211 -- $ 211
Credit Card Loans (billions) $ 1.6 $ 4.4 $ 6.0
Consumer Credit Card Accounts (millions) 1.6 3.2 4.8
Stores 3,847 1,930 5,777
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3/31/98 Norwest Wells Fargo Combined
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ATMs 1,752 4,400 6,152
Market Capitalization (billions) $ 30 $ 32 $ 62
Common Shares Outstanding (millions) 757.6 85.3
Net interest margin 5.77 6.01 5.89
Employees 58,255 32,414 90,669
Fortune 500 rank (1997) 157 160 65
Wells Fargo operates one of the largest consumer banking businesses in
the U.S., serving more than 10 million households in 10 Western states.
Norwest Corporation is a $96.1 billion financial solutions company
providing banking, insurance, investments, mortgage and consumer finance through
3,847 stores in all 50 states, Canada, the Caribbean, Latin America and
elsewhere internationally.
This news release contains forward-looking statements with respect to the
financial conditions, results of operations and businesses of Wells Fargo and
Norwest and, assuming the consummation of the merger, a combined Wells
Fargo/Norwest including statements relating to: (a) the cost savings and
accretion to reported earnings that will be realized from the merger; (b) the
impact on revenues of the merger, and (c) the restructuring charges expected to
be incurred in connection with the merger. These forward looking statements
involve certain risks and uncertainties. Factors that may cause actual results
to differ materially from those contemplated by such forward looking statements
include, among others, the following possibilities: (1) expected cost savings
from the merger cannot be fully realized or realized within this expected
timeframe; (2) revenues following the merger are lower than expected; (3)
competitive pressure among financial services companies increases significantly;
(4) costs or difficulties related to the integration of the businesses of
Norwest and Wells Fargo are greater than expected; (5) changes in the interest
rate environment reduce interest margins; (6) general economic conditions,
either internationally or nationally or in the states in which the combined
company will be doing business, are less favorable than expected; or
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(7) legislation or regulatory requirements or changes adversely affect the
businesses in which the combined company would be engaged.
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