by Calculated Risk on 10/03/2008 08:14:00 AM

From MSNBC: Wells Fargo will buy rival bank Wachovia (hat tip Stephen)

In an abrupt change of course, Wachovia Corp. said Friday it will be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, wiping out Wachovia’s previous plan to sell its banking operations to rival suitor Citigroup Inc.

A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp.

From the WSJ: Wells Fargo to Buy Wachovia

The Wells Fargo offer is for $7 a share in stock, based on Thursday's closing price, 79% above where Wachovia shares finished. Wells Fargo also will assume Wachovia's preferred stock and debt.

This is a huge surprise, but this deal makes much more sense than the deal with Citigroup. This also takes the FDIC off the hook.