It was a busy day in the financial world last Thursday as Wachovia Corp. announced it was buying A.G. Edwards for $6.8 billion, a deal that will make Wachovia Securities LLC the No. 2 retail brokerage in the United States.

The combined firm will boast $1.1 trillion in client assets and nearly 15,000 financial advisors. The company will also have an enhanced share of the U.S. brokerage market with significantly increased penetration in 48 of the 50 largest metropolitan areas.

Wachovia officials said the merged full-service firm will have 3,350 brokerage locations nationwide, including 1,500 dedicated retail offices in all 50 states and the District of Columbia. They added the deal will enable the combined organization to offer access to a broader selection of financial products and services.

“The long-term growth opportunities of the brokerage industry are extremely compelling to Wachovia, and we have long expressed our interest in growing this business both organically and through acquisition,” stated Ken Thompson, Wachovia chairman and CEO, in a press release. “This combination with A.G. Edwards, which is widely considered one of the most highly regarded remaining independent brokerage firms in the industry, will further enhance our scale and relevance.”

The combined retail brokerage organization will be headquartered in St. Louis, Mo. Other A.G. Edwards businesses including research, underwriting and investment banking, mutual funds and trust will be consolidated into the appropriate Wachovia lines of business. The combined firm will operate as Wachovia Securities.

The merger is expected to be completed in the fourth quarter of 2007, and integration is expected to be completed by the end of the first quarter of 2009.

Daniel J. Ludeman, a 27-year veteran of the brokerage industry, is currently president and CEO of Wachovia Securities and will be the president and CEO of the combined brokerage firm. Robert L. Bagby, who has been chairman and CEO of A.G. Edwards since 2001, will serve as chairman of the combined brokerage firm. He joined A.G. Edwards in 1975.

“This combination will bring together two similar companies determined to preserve and enhance a corporate culture that is focused on attracting the nation’s best financial advisors, respecting client relationships, providing unbiased advice and delivering excellent client service,” stated Bagby. “In assessing potential merger partners, we looked carefully for an organization that would offer A.G. Edwards the scale and enriched product suite required to fuel continued growth, while preserving the characteristics and culture that have made our organization so successful. In Wachovia Securities, we believe we found the perfect partner.”

Under the terms of the agreement, A.G. Edwards shareholders will receive 0.9844 shares of Wachovia common stock and $35.80 in cash for each of their A.G. Edwards common shares. Based on Wachovia’s share price at the close of business on May 30, the transaction would be valued at $89.50 per A.G. Edwards share.

The combined organization is expected to benefit from significant annual expense efficiencies, estimated at $395 million after taxes by 2009. These efficiencies represent 10 percent of the combined firm’s most recent fiscal year-end expense base.

Wachovia is expected to record merger-related and restructuring charges and exit cost purchase accounting adjustments of approximately $860 million after tax in connection with the transaction over the 18-month integration period.

Completion of the merger is subject to A.G. Edwards' shareholder approval and normal regulatory approvals.