Wells Fargo stock offering to raise $12.25B

NEW YORK (AP) -- Wells Fargo & Co. said Tuesday that a stock offering planned for later this week should raise $12.25 billion that will be used to help repay its government bailout loan.

The offering price of $25 a share was announced a day after Wells Fargo said it would repay the $25 billion it received as part of the Troubled Asset Relief Program.

The stock sale is expected to close on Friday, Wells Fargo said. It will raise $10.65 billion from selling 426 million shares of common stock, and another $1.6 billion from selling another 63.9 million shares to underwriters, bringing the total offering to 489.9 million shares.

The bank's shares outstanding will increase by about 10.4 percent from 4.69 billion shares of common stock outstanding as of Oct. 30. Wells Fargo's shares rose 17 cents to close at $25.66 on Tuesday.

"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," Chief Financial Officer Howard Atkins said in a prepared statement.

Wells Fargo was the last of the initial eight big banks that received TARP money to announce it would repay the government. The San Francisco-based bank's announcement on Monday came just hours after Citigroup Inc. said it would repay $20 billion in TARP money and the government would sell its nearly 34-percent stake in the bank.

By repaying TARP, Wells Fargo escapes restrictions like caps on executive compensation and dividends. It will also save the bank $1.25 billion annually in interest payments it had to pay the government for the money.

Aside from the stock sale, Wells Fargo also is issuing $1.35 billion in stock to employees instead of giving them cash bonuses. The TARP compensation restrictions affected the size of cash salary and bonuses banks could award their executives.

The size of the stock offering means Wells Fargo will no longer need to raise $1.5 billion through asset sales by the end of 2010, the bank said.

Separately Tuesday, Wells Fargo said it will pay $4.5 billion in cash for Prudential Financial Inc.'s stake in the companies' retail brokerage joint venture, which includes Wells Fargo Advisors LLC. Wells Fargo will buy the noncontrolling stake by Dec. 31.

"Wells Fargo considered the cost of Prudential's put in the assumptions for the Wachovia merger and we are pleased to take this next step pursuant to the agreement between Wachovia and Prudential," Wells Fargo Chief Financial Officer Howard Atkins said. Wells Fargo purchased Wachovia Corp. at the height of the financial market crisis last year.

Prudential Chairman and CEO John Strangfeld said in a statement that the deal will substantially enhance the company's capital position and financial flexibility going forward.

The purchase price is based on the value of Wells Fargo Advisors (then known as Wachovia Securities) at Jan. 1, 2008, prior to the contribution of the retail securities businesses of A.G. Edwards & Sons. Wells Fargo was advised by Greenhill & Co. LLC and Prudential was advised by Barclays Capital Inc. in determining the valuation.