Wachovia Corp.'s announcement that it will raise $7 billion in emergency capital has brought cries for the
resignation of CEO Ken Thompson (pictured). It has also drawn fresh scrutiny to the 2006 deal that brought Wachovia to this pass: the May 2006 purchase of Golden West Financial and its California option adjustable-rate mortgage business for $25.6 billion.
On the latter front, Wachovia's hometown Charlotte Observer ran a compelling and timely
analysis of the deal on Sunday. Key takeaways: The deal came together in just 10 days, despite the dissimilarity of the mortgage operations on the two sides. Integration was rocky, with Golden West mortgage execs ascendant, Wachovia mortgage execs departing, and Golden West's signature Pick-A-Payment loans being rolled out through mortgage offices and bank branches into 2007.
Taking a smaller company's hot product and moving it through the distribution network of a larger acquirer is, of course, a classic reason for a deal. But it's hard to think of a more poorly timed application of the concept. -
Kenneth Klee
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