A.G. Edwards Purchase Will Strengthen Wachovia

This morning, Wachovia announced that it will buy A.G. Edwards for $6.8 billion in cash and stock. The deal is expected to form the second largest retail brokerage in the U.S. after Merrill Lynch. The combined firm will have almost 14,800 financial advisors and 3,300 brokerage locations.

Industry observers give the merger a thumbs-up. “Post-acquisition, Wachovia’s business model will be unique as it will be one of a few firms that are top three in retail banking as well as retail brokerage,” says Alois Pirker, senior analyst at Aite Group. “Today, many firms (like Charles Schwab, for example) are aiming for a dual business model, where they can provide both top-notch brokerage and banking products and services to their retail clients. However, increasing cross-selling amongst these businesses will be a crucial success factor for the combined unit.” Wachovia will also need to turn its brokerage business into a successful wealth management business -- a transition firms like UBS Wealth Management USA and Morgan Stanley have found very difficult to make, he says. “Merrill Lynch is still a few steps ahead in this aspect. Size is not everything, but assuming Wachovia will be able to master the challenges mentioned above, the firm has the potential to become the benchmark for a new breed of retail brokerage/banking firms.”

Posted by Penny Crosman at 12:20 PM

This is a public forum. CMP Media and its affiliates are not responsible for and do not control what is posted herein. CMP Media makes no warranties or guarantees concerning any advice dispensed by its staff members or readers.

Community standards in this comment area do not permit hate language, excessive profanity, or other patently offensive language. Please be aware that all information posted to this comment area becomes the property of CMP Media LLC and may be edited and republished in print or electronic format as outlined in CMP Media's Terms of Service.

Important Note: This comment area is NOT intended for commercial messages or solicitations of business.