Wells Fargo & Co. announced that it will pay US$4.5 billion in cash for Prudential Financial, Inc.’s interest in their retail brokerage joint venture, which includes Wells Fargo Advisors, LLC.

The purchase price for Prudential’s interest is based upon an agreement between the parties on the value of Wells Fargo Advisors, which was then known as Wachovia Securities, back on January 1, 2008. Wells Fargo will acquire Prudential’s interest on or before December 31. The firm currently has almost 16,000 advisors, 6,000 “financial specialists”, and over US$900 billion in client assets under administration.

Prudential chairman and CEO, John Strangfeld, said, “We are pleased to have reached an all-cash agreement with Wells Fargo for the settlement of our interest in the Wachovia Securities joint venture. The settlement will substantially enhance our capital position and financial flexibility.”

The agreement comes on the heels of the news that Wells Fargo has raised US$12.25 billion in a common stock offering, that will allow it to pay back the U.S. government the US$25 billion it received under the TARP program. The underwriters to the offering fully exercised their option to acquire additional shares, boosting the value of the deal, and eliminating the need for US$1.5 billion in asset sales.

“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,” said Wells Fargo chief financial officer, Howard Atkins.

Fitch Ratings said that it does not foresee any rating implications stemming from the firm’s plan to repay its TARP investment.

IE