The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Filed Pursuant to Rule 424(b)(2)
File No. 333-154876
Subject to completion. Dated November 5, 2008
Prospectus supplement
(To Prospectus dated October 30, 2008)
Shares Wells Fargo & Company |
COMMON STOCK
We are offering shares of our common stock, par value $1-2/3 per share, to be sold in this offering. We will receive all of the net proceeds from the sale of our common stock.
Our common stock is listed on the New York Stock Exchange under the symbol WFC. On November 4, 2008, the last sale price of our common stock reported on the New York Stock Exchange was $35.11 per share.
For a discussion of certain risks that you should consider in connection with an investment in our common stock, see Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2007 and all subsequent filings under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, as well as the additional risk factors contained in this prospectus supplement beginning on page S-4.
The shares of common stock are not savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other governmental agency.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Per Share | Total(1) | |||
Public Offering Price |
$ | $ | ||
Underwriting Discounts and Commissions |
$ | $ | ||
Proceeds (before expenses) |
$ | $ |
(1) | We have granted the underwriters an option to purchase up to an additional shares of our common stock at the public offering price, less underwriting discounts and commissions, to cover over-allotments, if any, within 30 days of the date of this prospectus supplement. |
The underwriters are offering the shares of common stock as set forth under Underwriting. Delivery of the shares of common stock will be made on or about November , 2008.
J.P. Morgan
Goldman, Sachs & Co. | Morgan Stanley | UBS Investment Bank |
Wachovia Securities
November , 2008
Prospectus supplement
Page | ||
S-ii | ||
S-ii | ||
S-1 | ||
S-4 | ||
S-10 | ||
S-10 | ||
S-11 | ||
Certain U.S. federal tax considerations for non-U.S. holders of our common stock |
S-16 | |
S-19 | ||
S-29 |
Prospectus
Page | ||
About This Prospectus |
2 | |
Where You Can Find More Information |
3 | |
Use of Proceeds |
4 | |
Legal Opinions |
4 | |
Experts |
4 |
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About this prospectus supplement
You should read both this prospectus supplement and the accompanying prospectus, together with additional information described under the heading Where You Can Find More Information in the accompanying prospectus.
Unless otherwise mentioned or unless the context requires otherwise, all references in this prospectus supplement to Wells Fargo, we, us, our or similar references mean Wells Fargo & Company and its successors, and not Wells Fargo & Company together with its subsidiaries.
If the information set forth in this prospectus supplement differs in any way from the information set forth in the accompanying prospectus, you should rely on the information set forth in this prospectus supplement.
Currency amounts in this prospectus supplement are stated in U.S. dollars.
You should rely only on the information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus. This prospectus supplement may be used only for the purpose for which it has been prepared. No one is authorized to give information other than that contained in this prospectus supplement and the accompanying prospectus and in the documents incorporated by reference herein and in the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
We are not, and the underwriters are not, making an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. You should not assume that the information appearing in this prospectus supplement or any document incorporated by reference herein or in the accompanying prospectus is accurate as of any date other than the date of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date. Neither this prospectus supplement nor the accompanying prospectus constitutes an offer, or an invitation on our behalf or on behalf of the underwriters, to subscribe for and purchase any of the securities and may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
This prospectus supplement and the accompanying prospectus, including information incorporated in them by reference, has forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations due to several factors. For a discussion of some of these factors, see Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and Risk Factors and Regulation and Supervision in our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission (SEC) and available on the SECs website at www.sec.gov.
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The following information about this offering summarizes, and should be read in conjunction with, the information contained in this prospectus supplement and in the accompanying prospectus, and the documents incorporated therein by reference.
About Wells Fargo & Company
Wells Fargo & Company is a diversified financial services company organized under the laws of the State of Delaware and registered as a financial holding company and a bank holding company under the Bank Holding Company Act of 1956, as amended. As a diversified financial services organization, we own subsidiaries engaged in banking and a variety of related businesses. Our subsidiaries provide banking, insurance, investment, mortgage and consumer finance services through stores, the internet and other distribution channels throughout North America and elsewhere internationally.
Our common stock is traded on the New York Stock Exchange under the ticker symbol WFC. Our principal executive office is located at 420 Montgomery Street, San Francisco, California 94163. Our telephone number is (866) 878-5865. We maintain a website at www.wellsfargo.com. Information presented on or accessed through our website is not incorporated into, or made a part of, this prospectus supplement.
Recent developments
Merger agreement with Wachovia
On October 3, 2008, we announced that we had entered into an Agreement and Plan of Merger, dated as of October 3, 2008 (the Merger Agreement), with Wachovia Corporation (Wachovia). Under the Merger Agreement, Wachovia will, subject to the terms and conditions of the Merger Agreement, merge with and into Wells Fargo (the Wachovia merger), with Wells Fargo continuing as the surviving entity. Under the terms of the Merger Agreement, if the Wachovia merger is completed, each share of Wachovia common stock will be converted into 0.1991 of a share of our common stock, and each share of preferred stock of Wachovia will be exchanged for preferred stock issued by us having substantially identical terms. Consummation of the Wachovia merger is subject to certain customary conditions, including, among others, approval of the shareholders of Wachovia, governmental filings and regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of the other party, and material compliance by the other party with its obligations under the Merger Agreement.
On October 3, 2008, we and Wachovia, in connection with entering into the Merger Agreement, entered into a share exchange agreement (the Share Exchange Agreement) under which we agreed to acquire 10 newly issued shares of Series M Preferred Stock of Wachovia, representing 39.9% of the aggregate voting power exercisable in respect of the Wachovia merger and other items in respect of which common shareholders may vote, in exchange for the issuance of 1,000 shares of our common stock to Wachovia. The share exchange was completed on October 20, 2008.
On October 3, 2008, we filed with the SEC a Current Report on Form 8-K containing the press release announcing the Wachovia merger. On October 9, 2008, we filed with the SEC a Current Report on Form 8-K containing a copy of the Merger Agreement and a copy of the Share Exchange Agreement. On October 30, 2008, we filed with the SEC a Current Report on Form 8-K containing historical financial statements of Wachovia and preliminary unaudited pro forma condensed combined financial information which give effect to the Wachovia merger. On November 5, 2008, we filed with the SEC a Current Report on Form 8-K containing some additional information regarding the Wachovia merger. Each of these Current Reports on Form 8-K contains additional information and is incorporated by reference into this prospectus supplement. Copies of the Current Reports on Form 8-K are available at the SECs website at http://www.sec.gov.
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Department of Treasury Investment
The Emergency Economic Stabilization Act of 2008 authorizes the United States Department of the Treasury (the Department of the Treasury) to use appropriated funds to restore liquidity and stability to the U.S. financial system. As part of this authority, on October 28, 2008, at the request of the Department of the Treasury and pursuant to a Letter Agreement dated October 26, 2008 and Securities Purchase AgreementStandard Terms attached thereto (the Securities Purchase Agreement), we issued to the Department of the Treasury 25,000 shares of Wells Fargos Fixed Rate Cumulative Perpetual Preferred Stock, Series D without par value (Series D Preferred Stock), having a liquidation value per share equal to $1,000,000, for a total price of $25 billion. The Series D Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five years and thereafter at a rate of 9% per year. We may not redeem the Series D Preferred Stock during the first three years except with the proceeds from a qualified equity offering. After three years, we may, at our option, redeem the Series D Preferred Stock at par value plus accrued and unpaid dividends. The Series D Preferred Stock has limited voting rights. Prior to October 28, 2011, unless we have redeemed all of the Series D Preferred Stock or the Department of the Treasury has transferred all of the Series D Preferred Stock to a party not affiliated with the Department of the Treasury, the consent of the Department of the Treasury will be required for us to increase our common stock dividend or repurchase our common stock or other capital stock or equity securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the Securities Purchase Agreement. A consequence of the preferred securities purchase includes certain restrictions on executive compensation that could limit the tax deductibility of compensation we pay to executive management. As part of its purchase of the Series D Preferred Stock, the Department of the Treasury received a warrant to purchase 110,261,688 shares of our common stock at an initial per share exercise price of $34.01. The number of shares of our common stock issuable upon exercise of the warrant will be reduced by 50% if we receive $25 billion of proceeds from qualified equity offerings on or prior to December 31, 2009. The warrant provides for the adjustment of the exercise price and the number of shares of our common stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of our common stock, and upon certain issuances of our common stock at or below a specified price relative to the initial exercise price. The warrant expires ten years from the issuance date. Both the Series D Preferred Stock and the warrant will be accounted for as components of Tier 1 capital. This offering is not a qualified equity offering.
For additional information about the Department of the Treasurys investment, see our Current Report on Form 8-K filed with the SEC on October 30, 2008, which is incorporated by reference herein.
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The offering
Securities offered |
shares of common stock, par value $1-2/3 per share. |
Over-allotment option |
We have granted the underwriters an option to purchase up to an additional shares of common stock within 30 days of the date of this prospectus supplement in order to cover over-allotments, if any. |
Common stock to be outstanding after this offering |
shares of common stock ( shares of common stock if the underwriters exercise their over-allotment option in full), in each case based on 3,321,218,629 shares of common stock outstanding as of September 30, 2008, not including 151,543,421 shares held as treasury shares. This does not reflect any issuance of shares of our common stock in connection with the Wachovia merger, or upon exercise of a warrant to purchase 110,261,688 shares of our common stock issued to the Department of the Treasury. We anticipate that we will issue approximately 430 million shares of our common stock upon the closing of the Wachovia merger. |
Use of proceeds |
We estimate that the net proceeds of this offering will be approximately $ billion (or $ billion upon the exercise of the over-allotment option in full). We expect to use the net proceeds from the sale of our common stock for general corporate purposes. |
Risk factors |
See Risk Factors and other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus for a discussion of factors you should consider carefully before deciding to invest in shares of our common stock. |
NYSE symbol |
WFC |
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Your investment in our common stock involves risks. This prospectus supplement does not describe all of those risks. Before purchasing any shares of our common stock, you should carefully consider the following risk factors, in addition to the other information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus, including the discussion under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2007, as such discussion may be amended or updated in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008 and in other reports filed by us with the SEC (other than the portions of those documents not deemed to be filed).
Our share price may fluctuate.
The market price of our common stock could be subject to significant fluctuations due to a change in sentiment in the market regarding our operations or business prospects, the Wachovia merger, future sales or acquisitions to which we are a party, this offering, or future sales of our securities. Such risks may be affected by:
| operating results that vary from the expectations of management, securities analysts, and investors; |
| developments in our business or in the financial sector generally; |
| regulatory changes affecting our industry generally or our business and operations; |
| the operating and securities price performance of companies that investors consider to be comparable to us; |
| announcements of strategic developments, acquisitions, and other material events by us or our competitors; |
| our ability to integrate the companies and the businesses that we acquire, including Wachovia; |
| changes in the credit, mortgage, and real estate markets, including the market for mortgage-related and other asset-backed securities; and |
| changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset valuations or volatility. |
Stock markets, in general, have experienced over the year, and continue to experience, significant price and volume volatility, and the market price of our common stock may continue to be subject to similar market fluctuations that may be unrelated to our operating performance or prospects. Increased volatility could result in a decline in the market price of our common stock.
The Wachovia merger is subject to the receipt of consents and approvals from regulatory authorities that may impose conditions that could have an adverse effect on Wells Fargo or, if not obtained, could prevent completion of the Wachovia merger.
Before the Wachovia merger may be completed, various approvals and consents must be obtained from regulatory entities. These regulators may impose conditions on the completion of the Wachovia merger or require changes to the terms of such merger. Any such conditions or changes could have the effect of delaying completion of the Wachovia merger or imposing additional costs on or limiting the revenues of Wells Fargo following such merger.
A number of the regulatory approvals and consents required in connection with the Wachovia merger have been obtained. The waiting period applicable to the Wachovia merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 was terminated on October 10, 2008. The Federal Reserve approved the Wachovia merger on October 12, 2008.
Either Wachovia or Wells Fargo may terminate the Merger Agreement if the Wachovia merger has not been completed by October 3, 2009, unless the failure of such merger to be completed has resulted from the failure of the party seeking to terminate the Merger Agreement to perform its obligations.
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There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
Except as described under Underwriting, we are not restricted from issuing additional common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. We anticipate that we will issue approximately 430 million shares of our common stock upon the closing of the Wachovia merger. Pursuant to the Securities Purchase Agreement, the Department of the Treasury received a warrant to purchase 110,261,688 shares of our common stock at an initial per share exercise price of $34.01, subject to adjustment, which expires ten years from the issuance date, and Wells Fargo has agreed to provide the Department of the Treasury with registration rights covering the warrant and the underlying shares of common stock. The issuance of additional shares of common stock as a result of exercise of this warrant, the closing of the Wachovia merger or otherwise or the issuance of convertible securities will dilute the ownership interest of our existing common stockholders. The market price of our common stock could decline as a result of this offering as well as other sales of a large block of shares of our common stock or similar securities in the market after this offering, or the perception that such sales could occur.
You may not receive dividends on the common stock.
Holders of our common stock are only entitled to receive such dividends as our board of directors may declare out of funds legally available for such payments. We are incorporated in Delaware and governed by the Delaware General Corporation Law. Delaware law allows a corporation to pay dividends only out of surplus, as determined under Delaware law or, if there is no surplus, out of net profits for the fiscal year in which the dividend was declared and for the preceding fiscal year. Under Delaware law, however, we cannot pay dividends out of net profits if, after we pay the dividend, our capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets. Furthermore, holders of our common stock are subject to the prior dividend rights of holders of our preferred stock or the depositary shares representing such preferred stock then outstanding. Although we have historically declared cash dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future.
Prior to October 28, 2011, the consent of the Department of the Treasury will be required for us to increase our common stock dividend.
Pursuant to the Securities Purchase Agreement, prior to October 28, 2011 we are prohibited, without the consent of the Department of the Treasury, from declaring or paying any dividend or making any distribution on our common stock, other than regular quarterly cash dividends not exceeding $0.34 per share of common stock and dividends payable only in shares of our common stock, unless the shares of Series D Preferred Stock, which we issued to the Department of the Treasury under that agreement have been redeemed in whole or the Department of the Treasury has transferred all of that preferred stock to third parties.
The common stock is equity and is subordinate to our existing and future indebtedness and preferred stock and effectively subordinated to all the indebtedness and other non-common equity claims against our subsidiaries.
Shares of the common stock are equity interests in us and do not constitute indebtedness. As such, shares of the common stock will rank junior to all of our indebtedness and to other non-equity claims against us and our assets available to satisfy claims against us, including in our liquidation. Additionally, holders of our common stock are subject to the prior dividend and liquidation rights of holders of our outstanding preferred stock. Our board of directors is authorized to issue additional classes or series of preferred stock without any action on the part of the holders of our common stock. Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries liquidation or reorganization is subject to the prior claims of that subsidiarys creditors, including holders of any preferred stock. As of September 30, 2008, we had $107.35 billion of outstanding long-term debt, the aggregate liquidation preference of all our outstanding preferred stock was $625 million and the
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aggregate liquidation preference of the preferred stock authorized and which may be issued in the future pursuant to certain stock purchase contracts entered into in connection with the issuance of preferred purchase securities by certain of our wholly owned trust subsidiaries was $4.25 billion. Subsequently, on October 28, 2008, we issued 25,000 shares of Series D Preferred Stock to the Department of the Treasury having an aggregate liquidation preference of $25 billion. In addition, upon completion of the Wachovia merger, we expect to issue additional shares of our preferred stock in exchange for Wachovia preferred stock having an aggregate liquidation preference of approximately $9.83 billion. As of September 30, 2008, Wachovia had $183.35 billion of outstanding long-term debt. The common stock will also be subordinated to our short-term debt. The terms of each of our outstanding series of preferred stock, including the Series D Preferred Stock, prohibit us from paying dividends with respect to our common stock unless all accrued and unpaid dividends for all completed dividend periods with respect to that preferred stock have been paid.
If we are deferring payments on our outstanding junior subordinated debt securities or are in default under the indentures governing those securities, or if we are in arrears on the payment of dividends on our outstanding preferred stock, we will be prohibited from making distributions on the common stock.
The terms of our outstanding junior subordinated debt securities prohibit us from declaring or paying any dividends or distributions on our capital stock, including our common stock, or purchasing, acquiring, or making a liquidation payment on such stock, if an event of default has occurred and is continuing under the applicable indenture, we are in default with respect to a guarantee payment under the guarantee of the related trust preferred securities or we have given notice of our election to defer interest payments but the related deferral period has not yet commenced or a deferral period is continuing. In addition, the terms of each of our outstanding series of preferred stock, including the Series D Preferred Stock, prohibit us from declaring or paying any dividends or distributions on our common stock unless all accrued and unpaid dividends for all completed dividend periods with respect to that preferred stock have been paid.
Our ability to pay dividends depends upon the results of operations of our subsidiaries.
We are a holding company that conducts substantially all of our operations through our bank subsidiaries and other subsidiaries. As a result, our ability to make dividend payments on the common stock depends primarily on certain federal regulatory considerations and the receipt of dividends and other distributions from our subsidiaries. There are various regulatory restrictions on the ability of our banking subsidiaries to pay dividends or make other payments to us. For additional information regarding the regulatory restrictions applicable to us and our subsidiaries, see Item 1. BusinessRegulation and Supervision in our Annual Report on Form 10-K for the year ended December 31, 2007, which is incorporated by reference herein.
In addition, our right to participate in any distribution of assets of any of our subsidiaries upon the subsidiarys liquidation or otherwise, and thus your ability as a holder of the common stock to benefit indirectly from such distribution, will be subject to the prior claims of creditors of that subsidiary, except to the extent that any of our claims as a creditor of such subsidiary may be recognized. As a result, the common stock effectively will be subordinated to all existing and future liabilities and obligations of our subsidiaries.
Anti-takeover provisions could negatively impact our stockholders.
Provisions of Delaware law and of our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us or have the effect of discouraging a third party from attempting to acquire control of us. For example, we are subject to Section 203 of the Delaware General Corporation Law, which would make it more difficult for another party to acquire us without the approval of our board of directors. Additionally, our certificate of incorporation authorizes our board of directors to issue preferred stock, which could be issued as a defensive measure in response to a takeover proposal. These provisions could make it more difficult for a third party to acquire us even if an acquisition might be in the best interest of our stockholders. The
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ability of a third party to acquire us is also limited under applicable banking regulations. The Bank Holding Company Act of 1956 requires any bank holding company (as defined in that Act) to obtain the approval of the Federal Reserve prior to acquiring more than 5% of our outstanding common stock. Any person other than a bank holding company is required to obtain prior approval of the Federal Reserve to acquire 10% or more of our outstanding common stock under the Change in Bank Control Act of 1978. Any holder of 25% or more of our outstanding common stock, other than an individual, is subject to regulation as a bank holding company under the Bank Holding Company Act. Furthermore, under Delaware law, Wells Fargos board of directors can adopt a shareholder rights plan without stockholder approval. If adopted, a shareholder rights plan could result in substantial dilution to a person or group that attempts to acquire Wells Fargo on terms not approved by Wells Fargos board of directors.
The value of our common stock could be adversely affected to the extent we fail to realize the expected benefits of the Wachovia merger.
The Wachovia merger will involve the integration of the businesses of Wachovia and Wells Fargo. It is possible that the integration process could result in the loss of key Wachovia employees, the disruption of Wachovias ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect Wachovias ability to maintain relationships with customers and employees. As with any financial institution merger, there also may be disruptions that cause Wachovia to lose customers or cause customers to take deposits out of Wachovias banks.
Current disruption and volatility in global financial markets might continue and governments may take measures to intervene.
Over the last year, global financial markets have experienced extraordinary disruption and volatility following adverse changes in the global credit markets. Governments have taken highly significant measures in response to such events, including enactment of the Emergency Economic Stabilization Act of 2008, or EESA, in the United States. Such dislocation and instability, and potential government responses thereto, may negatively impact the value of our common stock.
Difficult market conditions have adversely affected our industry.
Given the significance of our business in the United States, we are particularly exposed to downturns in the U.S. economy. Dramatic declines in the housing market over the past year, with falling home prices, increasing foreclosures, unemployment and under-employment, have negatively impacted the credit performance of mortgage loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities as well as major commercial and investment banks. These write-downs, initially of mortgage-backed securities but spreading to credit default swaps and other derivative and cash securities, in turn, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the financial markets generally and the strength of counterparties, many lenders and institutional investors have reduced or ceased providing funding to borrowers, including to other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business activity generally. The resulting economic pressure on consumers and lack of confidence in the financial markets has adversely affected our business, financial condition and results of operations. We do not expect that the difficult conditions in the financial markets are likely to improve in the near future and we expect those conditions to have an ongoing impact on our financial results. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on us and others in the financial institutions industry. In particular, we may face the following risks in connection with these events:
| We expect to face increased regulation of our industry, including as a result of the EESA. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities. |
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| Market developments may affect consumer confidence levels and may cause declines in consumer credit usage and adverse changes in payment patterns, causing increases in delinquencies and default rates, which we expect could impact our charge-offs and provision for credit losses. |
| Our ability to assess the creditworthiness of our customers may be impaired if the models and approaches we use to select, manage, and underwrite our customers become less predictive of future behaviors. |
| The process we use to estimate losses inherent in our credit exposure requires difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic predictions might impair the ability of our borrowers to repay their loans, which may no longer be capable of accurate estimation which may, in turn, impact the reliability of the process. |
| Competition in our industry could intensify as a result of the increasing consolidation of financial services companies in connection with current market conditions. |
| We may be required to pay significantly higher Federal Deposit Insurance Corporation premiums because market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits. |
The soundness of other financial institutions could adversely affect us.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. Many of these transactions expose us to credit risk in the event of default of our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There can be no assurance that any such losses would not materially and adversely affect our results of operations or earnings.
We are subject to pending litigation brought by Citigroup, Inc. in connection with our agreement to merge with Wachovia.
On or about October 4, 2008, Citigroup, Inc. (Citigroup) purported to commence an action in New York state court against Wells Fargo, Wachovia, and their respective directors alleging, in part, that our agreement to merge with Wachovia constitutes tortious interference by Wells Fargo of an exclusivity agreement between Citigroup and Wachovia. The complaint has been removed to the United States District Court for the Southern District of New York. After the case was removed, Citigroup purported to amend the complaint to seek $20 billion in compensatory damages, $20 billion in restitutionary and unjust enrichment damages, and $40 billion in punitive damages. We believe that we have valid defenses with respect to Citigroups claims for any damages and will vigorously defend our position. There can be no assurances regarding the outcome of this litigation.
Our credit ratings are reviewed periodically, and could be subject to downgrade.
Our credit ratings are an important factor in determining our cost of borrowing. Currently, Moodys Investors Service rates Wells Fargo Bank, N.A. as Aaa, its highest investment grade, and rates the Companys senior debt as Aa1. Standard & Poors Ratings Services rates Wells Fargo Bank, N.A. as AAA and the Companys senior debt rating as AA+. Wells Fargo Bank, N.A. is currently the only U.S. bank to have the highest possible credit rating from both Moodys and S&P. Following the announcement of the Wachovia merger, Moodys and S&P placed us on their respective negative credit watch lists. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, and level and quality of earnings, and there can be no assurance that we will maintain the aforementioned credit ratings. Failure to raise sufficient capital in this offering could cause us to have lower capital ratios, which could result in the downgrade of our credit ratings.
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A change in our methodologies, assumptions and/or models used to estimate our allowance for credit losses could result in a charge to earnings.
We have agreed to acquire Wachovia in a stock-for-stock transaction that is expected to close by the end of 2008. In the Wachovia merger, Wells Fargo will acquire all of the assets and liabilities of Wachovia and its subsidiaries (including loan portfolios, securities and other assets with respect to which Wachovia is at risk of loss).
When we loan money or commit to loan money we incur credit risk, or the risk of losses if our borrowers do not repay their loans. We reserve for credit losses by establishing an allowance through a charge to earnings. The amount of this allowance is based on our assessment of credit losses inherent in our loan portfolio (including unfunded credit commitments). The process for determining the amount of the allowance is critical to our financial results and condition. It requires difficult, subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans.
Wachovia uses different assumptions and models than we use for establishing allowances for credit losses. As part of the integration of the businesses of Wachovia and Wells Fargo, we expect to conform our methodologies, assumptions and/or models, which could result in an increase in our recorded credit losses and charges to earnings. We may increase the allowance for credit losses because of changing economic conditions or as a result of changes in our assumptions and/or models. As a result, there can be no assurance that our allowance for credit losses at September 30, 2008, together with the expected future credit losses expected to be recorded after closing with respect to Wachovias assets, will be sufficient to cover future credit losses. We may be required to recognize credit losses for any of the reasons discussed above in the fourth quarter of 2008 and in future periods, thus reducing earnings.
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We estimate that the net proceeds of this offering will be approximately $ billion (or $ billion upon the exercise of the over-allotment option in full), based on the public offering price of $ per share, after deducting underwriting commissions and expenses. We expect to use the net proceeds from the sale of our common stock for general corporate purposes.
The following table sets forth our consolidated capitalization as of September 30, 2008:
| on an actual basis; |
| on a pro forma basis giving effect to the Wachovia merger, including the issuance of approximately 430 million shares of our common stock and approximately 9.9 million shares of our preferred stock; and |
| on a pro forma as adjusted basis to give effect to the Wachovia merger, including the issuance of common stock and preferred stock, as described above, and the offering hereby of shares of common stock at a price of $ per share, for total proceeds of approximately $ billion. |
This information should be read together with our unaudited condensed consolidated financial statements and other financial information set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, and our preliminary unaudited pro forma condensed combined financial data reflecting the merger with Wachovia included as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on October 30, 2008, which reports are incorporated herein by reference. This information does not reflect $25 billion of securities issued to the United States Department of the Treasury on October 28, 2008.
As of September 30, 2008 | ||||||||||||
Actual | Pro Forma(1) | Pro Forma As Adjusted(2) |
||||||||||
(in millions) | ||||||||||||
LONG-TERM DEBT: |
$ | 107,350 | $ | 286,516 | $ | 286,516 | ||||||
STOCKHOLDERS EQUITY: |
||||||||||||
Preferred stock(3) |
$ | 625 | $ | 10,156 | $ | 10,156 | ||||||
Common stock(4) |
5,788 | 6,497 | ||||||||||
Additional paid-in capital |
8,348 | 22,311 | 22,311 | |||||||||
Retained earnings |
40,853 | 40,853 | 40,853 | |||||||||
Cumulative other comprehensive income (loss) |
(2,783 | ) | (2,783 | ) | (2,783 | ) | ||||||
Treasury stock(5) |
(5,207 | ) | (5,207 | ) | (5,207 | ) | ||||||
Unearned ESOP shares |
(667 | ) | (667 | ) | (667 | ) | ||||||
Total stockholders equity |
$ | 46,957 | $ | 71,160 | $ | |||||||
Total long-term debt and stockholders equity |
$ | 154,307 | $ | 357,676 | $ | |||||||
(1) | Consolidated capitalization on a pro forma basis giving effect to the Wachovia merger, including the issuance of approximately 430 million shares of our common stock and approximately 9.9 million shares of our preferred stock. |
(2) | Consolidated capitalization on a pro forma as adjusted basis to give effect to the Wachovia merger, including the issuance of common stock and preferred stock, as described above, and the offering hereby of shares of common stock at a price of $ per share, for total proceeds of approximately $ billion. |
(3) | At September 30, 2008, we had 4 million preference shares authorized, of which no shares were outstanding, and 20 million shares of preferred stock authorized, of which there were 625,444 shares outstanding. |
(4) | At September 30, 2008, we had 6 billion shares of common stock authorized and had 3,472,762,050 shares issued (including 151,543,421 treasury shares). |
(5) | At September 30, 2008, we had 151,543,421 treasury shares. |
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This section summarizes the material terms and provisions of our common stock. We have also filed our restated certificate of incorporation, as amended, and our by-laws (as amended through September 23, 2008), as exhibits to the registration statement of which this prospectus is a part. The summary contained in this section is not a complete statement of the rights and terms of our common stock. You should read our restated certificate of incorporation, as amended, and our by-laws (as amended through September 23, 2008), and the Delaware General Corporation Law, for a complete statement of the rights and terms of our common stock and for additional information before you buy any shares of our common stock.
General
Shares authorized and outstanding. As of the date of this prospectus supplement, Wells Fargo was authorized to issue 6,000,000,000 shares of common stock. At September 30, 2008, Wells Fargo had issued 3,472,762,050 shares of common stock, of which 3,321,218,629 shares were outstanding and 151,543,421 shares were held as treasury shares. In addition, pursuant to the Securities Purchase Agreement, Wells Fargo issued to the Department of the Treasury a warrant to purchase 110,261,688 shares of our common stock. We anticipate that we will issue approximately 430 million shares of our common stock upon the closing of the Wachovia merger.
Dividends. Holders of Wells Fargo common stock receive dividends if, when and as declared by Wells Fargos board of directors out of funds that Wells Fargo can legally use to pay dividends. Wells Fargo may pay dividends in cash, stock or other property. In some cases, holders of Wells Fargo common stock may not receive dividends until Wells Fargo has satisfied its obligations to holders of outstanding preferred stock. Other restrictions on Wells Fargos ability to pay dividends are described below under Restrictions on Payment of Dividends.
Voting rights. Holders of Wells Fargo common stock have the exclusive right to vote on all matters presented to Wells Fargo stockholders unless Delaware law or the certificate of designations for an outstanding series of preferred stock gives the holders of that series of preferred stock the right to vote on certain matters. Each holder of Wells Fargo common stock is entitled to one vote per share. Holders of Wells Fargo common stock have no cumulative voting rights for the election of directors. Wells Fargos board of directors is not classified. In accordance with the Delaware General Corporation Law, amendments to our restated certificate of incorporation must be approved by the affirmative vote of the holders of a majority of the outstanding shares of each class entitled to vote thereon as a class, and a merger in which we are not the surviving corporation, dissolution, or the sale of all or substantially all of our assets must be approved by the affirmative vote of the holders of a majority of the voting power of the then outstanding voting shares.
Other rights. If Wells Fargo voluntarily or involuntarily liquidates, dissolves or winds up its business, holders of its common stock will receive pro rata, according to shares held by them, any of Wells Fargos remaining assets available for distribution to stockholders after Wells Fargo has provided for payment of all debts and other liabilities, including any liquidation preference for outstanding shares of preferred stock. When Wells Fargo issues securities in the future, holders of Wells Fargo common stock have no preemptive rights with respect to those securities. This means the holders of Wells Fargo common stock have no right, as holders of Wells Fargo common stock, to buy any portion of those issued securities. Holders of Wells Fargo common stock have no rights to have their shares of common stock redeemed by Wells Fargo or to convert their shares of common stock into shares of any other class of Wells Fargo capital stock.
Listing. Outstanding shares of Wells Fargo common stock are listed on the New York Stock Exchange under the symbol WFC. Wells Fargo Bank, National Association is the transfer agent and registrar for Wells Fargo common stock.
Fully paid. The outstanding shares of Wells Fargo common stock are fully paid and non-assessable. This means the full purchase price for the shares has been paid and the holders of the shares will not be assessed any additional amounts for the shares.
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Restrictions on payment of dividends
Wells Fargo is incorporated in Delaware and is governed by the Delaware General Corporation Law. Delaware law allows a corporation to pay dividends only out of surplus, as determined under Delaware law or, if there is no surplus, out of net profits for the fiscal year in which the dividend was declared and for the preceding fiscal year. Under Delaware law, however, Wells Fargo cannot pay dividends out of net profits if, after it pays the dividend, its capital would be less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.
As a bank holding company, Wells Fargos ability to pay dividends is affected by the ability of its bank and non-bank subsidiaries to pay dividends to it. Various federal laws limit the amount of dividends Wells Fargos national bank subsidiaries can pay to it without regulatory approval. State-chartered banks are subject to state regulations that limit dividends.
The terms of our outstanding junior subordinated debt securities prohibit us from declaring or paying any dividends or distributions on our capital stock, including our common stock, or purchasing, acquiring, or making a liquidation payment on such stock, if an event of default has occurred and is continuing under the applicable indenture, we are in default with respect to a guarantee payment under the guarantee of the related trust preferred securities or we have given notice of our election to defer interest payments but the related deferral period has not yet commenced or a deferral period is continuing. In addition, the terms of each of our outstanding series of preferred stock prohibit us from declaring or paying any dividends or distributions on our common stock unless all accrued and unpaid dividends for all completed dividend periods with respect to that preferred stock have been paid.
Pursuant to the Securities Purchase Agreement, prior to October 28, 2011 Wells Fargo is prohibited, without the consent of the Department of the Treasury, from declaring or paying any dividend or making any distribution on its common stock, other than regular quarterly cash dividends not exceeding $0.34 per share of common stock and dividends payable only in shares of its common stock, unless prior to October 28, 2011 the shares of Series D Preferred Stock which Wells Fargo issued to the Department of the Treasury under the Securities Purchase Agreement have been redeemed in whole or the Department of the Treasury has transferred all of that preferred stock to third parties.
Restrictions on ownership of Wells Fargo common stock
The Bank Holding Company Act of 1956 requires any bank holding company (as defined in that Act) to obtain the approval of the Board of Governors of the Federal Reserve System prior to acquiring more than 5% of Wells Fargos outstanding common stock. Any person other than a bank holding company is required to obtain prior approval of the Federal Reserve Board to acquire 10% or more of Wells Fargos outstanding common stock under the Change in Bank Control Act of 1978. Any holder of 25% or more of Wells Fargos outstanding common stock, other than an individual, is subject to regulation as a bank holding company under the Bank Holding Company Act.
Anti-takeover provisions in the Delaware General Corporation Law, our restated certificate of incorporation and our by-laws
Certain provisions of Delaware law could make it more difficult for a third party to acquire control of us or have the effect of discouraging a third party from attempting to acquire control of us. For example, we are subject to Section 203 of the Delaware General Corporation Law, which would make it more difficult for another party to acquire us without the approval of our board of directors. Certain provisions of Wells Fargos restated certificate of incorporation, as amended, could make it less likely that Wells Fargo management would be changed or someone would acquire voting control of Wells Fargo without the consent of its board of directors. These provisions could delay, deter or prevent tender offers or takeover attempts that stockholders might believe are in their best interests, including tender offers or takeover attempts that could allow stockholders to receive premiums over the market price of their common stock.
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Preferred stock. Wells Fargos board of directors can at any time, under Wells Fargos restated certificate of incorporation, as amended, and without stockholder approval, issue one or more new series of preferred stock. In some cases, the issuance of preferred stock could discourage or make more difficult attempts to take control of Wells Fargo through a merger, tender offer, proxy context or otherwise. Preferred stock with special voting rights or other features issued to persons favoring Wells Fargo management could stop a takeover by preventing the person trying to take control of Wells Fargo from acquiring enough voting shares to take control.
Rights plan. Although Wells Fargo does not have a stockholder rights plan (commonly referred to as a poison pill) as of the date of this document, under Delaware law, Wells Fargos board of directors can adopt a rights plan without stockholder approval. If adopted, a rights plan could operate to cause substantial dilution to a person or group that attempts to acquire Wells Fargo on terms not approved by Wells Fargos board of directors.
Amendment of by-laws. Under Wells Fargos by-laws, the Wells Fargo board of directors can adopt, amend or repeal the by-laws, subject to limitations under the Delaware General Corporation Law or as provided in the by-laws. Wells Fargo stockholders also have the power to change or repeal Wells Fargos by-laws.
Preferred stock
As of the date of this prospectus supplement, Wells Fargo was authorized to issue, without further stockholder approval, 24,000,000 shares of preferred stock, consisting of 20,000,000 shares of preferred stock without par value and 4,000,000 shares of preference stock without par value, including shares already issued or reserved for issuance. At September 30, 2008, Wells Fargo had 625,444 shares of preferred stock issued and outstanding. Wells Fargo had not issued any shares of preference stock as of September 30, 2008. In this description of Wells Fargo capital stock, preferred stock means preferred stock and preference stock unless the context indicates otherwise.
Wells Fargos board of directors is authorized to issue preferred stock in one or more series, to fix the number of shares in each series, and to determine the designations and voting powers, preferences, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of each series, all without any vote or other action on the part of the holders of Wells Fargo common stock. Wells Fargo can issue shares of preferred stock at any time in any amount (including fractional shares), provided that not more than 24,000,000 shares of preferred stock are outstanding at any one time.
Shares of Wells Fargo common stock are subject to the rights of holders of Wells Fargo preferred stock. Wells Fargo preferred stockholders are entitled to payment of dividends on their preferred stock before Wells Fargo can pay dividends on Wells Fargo common stock. If Wells Fargo voluntarily or involuntarily liquidates, dissolves or winds up its business, its preferred stockholders are entitled to receive, out of any assets remaining for distribution to stockholders, all accrued and unpaid dividends on their preferred stock and any liquidation preference for their preferred stock before holders of Wells Fargo common stock receive any distribution of assets with respect to their common stock.
ESOP preferred stock. There are 10 series of ESOP preferred stock outstanding, issued in each of the years from 1999 through 2008, representing an aggregate of 3,037,700 authorized shares of preferred stock and 625,444 outstanding shares of preferred stock. The ESOP preferred stock has a stated value of $1,000.00 per share and provides for cumulative quarterly dividends at a rate that varies depending on its year of issuance and on the Current Market Price, as that term is used in the certificate of designations for the applicable series of ESOP preferred stock, of one share of common stock as of a fixed trading date as compared with certain target prices for one share of common stock specified in the applicable certificate of designations. All outstanding shares of ESOP preferred stock are held of record by a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the Plan). The ESOP preferred stock is subject to redemption, in whole or in part, at our option, at a price equal to the higher of:
| $1,000.00 per share, plus accrued and unpaid dividends thereon to the date fixed for redemption; and |
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| the Fair Market Value per share of ESOP preferred stock, as that term is used in the certificate of designations for the applicable series of ESOP preferred stock, on the date fixed for redemption. |
The ESOP preferred stock is mandatorily convertible, without any further action on our part or on the part of the holder, into common stock at the applicable Conversion Price, as that term is used in the certificate of designations for the applicable series of ESOP preferred stock, when:
| the ESOP preferred stock is released from the unallocated reserve of the Plan in accordance with the terms of the Plan; or |
| when record ownership of the shares of the ESOP preferred stock is transferred to any person other than a successor trustee under the Plan. |
In addition, a holder of ESOP preferred stock is entitled, at any time before the date fixed for redemption, to convert shares of ESOP preferred stock held by that holder into shares of common stock at the then-applicable Conversion Price.
In the event of our voluntary or involuntary liquidation, dissolution or winding up of our business, the holders of ESOP preferred stock are entitled to receive out of our assets available for distribution to stockholders, before any distribution of assets is made to holders of common stock, $1,000.00 per share, plus accrued and unpaid dividends.
Except as required by law, the holders of ESOP preferred stock are not entitled to vote, except under the limited circumstances. The ESOP preferred stock does not have preemptive rights and is not subject to any sinking fund and we are not otherwise obligated to repurchase or redeem the ESOP preferred stock.
PPS preferred stock. In connection with the issuance of preferred purchase securities by wholly owned trust subsidiaries of Wells Fargo, Wells Fargo has designated two series of preferred stock, consisting of 25,001 designated shares of Non-Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock) and 17,501 designated shares of Non-Cumulative Perpetual Preferred Stock, Series B (Series B Preferred Stock), expected to be issued pursuant to stock purchase contracts in the future to the trusts as part of the preferred purchase securities offerings. When issued, the PPS preferred stock will have a fixed liquidation preference of $100,000 per share. If Wells Fargo liquidates, dissolves or winds up its affairs, holders of PPS preferred stock will be entitled to receive, out of Wells Fargos assets available for distribution to stockholders, an amount per share equal to the liquidation preference per share. The Preferred Stock will not be convertible into Wells Fargo common stock or any other class or series of Wells Fargo securities and will not be subject to any sinking fund or any other obligation of Wells Fargo for their repurchase or retirement.
Dividends on shares of PPS preferred stock will not be mandatory. Holders of the PPS preferred stock, in preference to the holders of Wells Fargo common stock and of any other shares of Wells Fargo stock ranking junior to the PPS preferred stock as to payment of dividends, will be entitled to receive, only when, as and if declared by the Wells Fargo board of directors, out of assets legally available for payment, cash dividends. These dividends will be payable as follows:
| on the Series A Preferred Stock (a) if it is issued prior to March 26, 2013, semi-annually at a rate per annum equal to 7.70% until March 2013, and (b) thereafter, quarterly at a rate per annum that will be reset quarterly equal to the three-month LIBOR plus 3.89%, applied to the $100,000 liquidation preference per share; and |
| on the Series B Preferred Stock (a) if it is issued prior to September 26, 2013, semi-annually at a rate per annum equal to 9.75% until September 2013, and (b) thereafter, quarterly at a rate per annum that will be reset quarterly equal to the three-month LIBOR plus 5.83%, applied to the $100,000 liquidation preference per share. |
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The Series A Preferred Stock may not be redeemed prior to the later of March 26, 2013 and the Stock Purchase Date, as used in the certificate of designations for the Series A Preferred Stock. The Series B Preferred Stock may not be redeemed prior to the later of September 26, 2013 and the Stock Purchase Date, as used in the certificate of designations for the Series B Preferred Stock. On the applicable date or on any subsequent dividend payment date, subject to limitations referenced below, the PPS preferred stock may be redeemed, in whole or in part, at Wells Fargos option. Any such redemption will be at a cash redemption price of $100,000 per share, plus an amount equal to any declared and unpaid dividends, without regard to any undeclared dividends. Holders of PPS preferred stock will have no right to require the redemption or repurchase of the PPS preferred stock.
Wells Fargos right to redeem the PPS preferred stock once issued is subject to the prior approval of the Federal Reserve and certain other contractual obligations set forth in a replacement capital covenant entered into by Wells Fargo at the time the preferred purchase securities were issued.
Except as required by law, the holders of PPS preferred stock are not entitled to vote, except under the limited circumstances. The PPS preferred stock does not have preemptive rights.
Series D preferred stock. Pursuant to the Securities Purchase Agreement, Wells Fargo issued to the United States Department of the Treasury 25,000 shares of Series D Preferred Stock, having a liquidation amount per share equal to $1,000,000, for a total price of $25 billion.
The Series D Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five years and thereafter at a rate of 9% per year. Wells Fargo may not redeem the Series D Preferred Stock during the first three years except with the proceeds from a qualified equity offering. After three years, Wells Fargo may, at its option, subject to any necessary bank regulatory approval, redeem the Series D Preferred Stock at par value plus accrued and unpaid dividends. The Series D Preferred Stock is generally non-voting. Prior to October 28, 2011, unless Wells Fargo has redeemed the Series D Preferred Stock or the Department of the Treasury has transferred all of the Series D Preferred Stock to third parties, the consent of the Department of the Treasury will be required for Wells Fargo to declare or pay any dividend or make any distribution on Wells Fargos common stock, other than regular quarterly cash dividends not exceeding $0.34 or dividends payable only in shares of its common stock, or repurchase our common stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the Securities Purchase Agreement. This offering is not a qualified equity offering.
S-15
Certain U.S. federal tax considerations for
non-U.S. holders of our common stock
The following is a general discussion of certain U.S. federal income tax considerations with respect to the ownership and disposition of shares of our common stock applicable to non-U.S. holders who acquire such shares in this offering and hold such shares as a capital asset (generally, property held for investment). For purposes of this discussion, a non-U.S. holder means a beneficial owner of our common stock (other than an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes) that is not, for U.S. federal income tax purposes, any of the following:
| a citizen or resident of the United States; |
| a corporation created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; |
| an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
| a trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) such trust has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes. |
This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated thereunder, judicial opinions, published positions of the Internal Revenue Service, and other applicable authorities, all of which are subject to change (possibly with retroactive effect). This discussion does not address all aspects of U.S. federal income taxation that may be important to a particular non-U.S. holder in light of that non-U.S. holders individual circumstances, nor does it address any aspects of U.S. federal estate and gift, state, local, or non-U.S. taxes. This discussion may not apply, in whole or in part, to particular non-U.S. holders in light of their individual circumstances or to holders subject to special treatment under the U.S. federal income tax laws (such as insurance companies, tax-exempt organizations, financial institutions, brokers or dealers in securities, controlled foreign corporations, passive foreign investment companies, non-U.S. holders that hold our common stock as part of a straddle, hedge, conversion transaction or other integrated investment, and certain U.S. expatriates).
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners of a partnership holding our common stock should consult their tax advisor as to the particular U.S. federal income tax consequences applicable to them.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES FOR NON-U.S. HOLDERS RELATING TO THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK. PROSPECTIVE HOLDERS OF OUR COMMON STOCK SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL, FOREIGN INCOME AND OTHER TAX LAWS) OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.
Dividends
In general, any distributions we make to a non-U.S. holder with respect to its shares of our common stock that constitutes a dividend for U.S. federal income tax purposes will be subject to U.S. withholding tax at a rate of 30% of the gross amount, unless the non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable tax treaty and the non-U.S. holder provides proper certification of its eligibility for such reduced rate.
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A distribution will constitute a dividend for U.S. federal income tax purposes to the extent of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any distribution not constituting a dividend will be treated first as reducing the adjusted basis in the non-U.S. holders shares of our common stock and, to the extent it exceeds the adjusted basis in the non-U.S. holders shares of our common stock, as gain from the sale or exchange of such stock.
Dividends we pay to a non-U.S. holder that are effectively connected with its conduct of a trade or business within the United States (and, if a tax treaty applies, are attributable to a U.S. permanent establishment) will not be subject to U.S. withholding tax, as described above, if the non-U.S. holder complies with applicable certification and disclosure requirements. Instead, such dividends generally will be subject to U.S. federal income tax on a net income basis, in the same manner as if the non-U.S. holder were a resident of the United States. Dividends received by a foreign corporation that are effectively connected with its conduct of trade or business within the United States may be subject to an additional branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable tax treaty).
Gain on sale or other disposition of common stock
In general, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of the non-U.S. holders shares of our common stock unless:
| the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder); |
| the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or |
| we are or have been a U.S. real property holding corporation, which we refer to as a USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding such disposition or such non-U.S. holders holding period of our common stock. |
Gain that is effectively connected with the conduct of a trade or business in the United States (or so treated) generally will be subject to U.S. federal income tax, net of certain deductions, at regular U.S. federal income tax rates. If the non-U.S. holder is a foreign corporation, the branch profits tax described above also may apply to such effectively connected gain. An individual non-U.S. holder who is subject to U.S. federal income tax because the non-U.S. holder was present in the United States for 183 days or more during the year of sale or other disposition of our common stock will be subject to a flat 30% tax on the gain derived from such sale or other disposition, which may be offset by United States source capital losses. We believe we are not, and have not been, a USRPHC, and we do not expect to become a USRPHC.
Backup withholding, information reporting and other reporting requirements
We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to, and the tax withheld with respect to, each non-U.S. holder. These reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable tax treaty. Copies of this information reporting may also be made available under the provisions of a specific tax treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established.
A non-U.S. holder will generally be subject to backup withholding for dividends on our common stock paid to such holder unless such holder certifies under penalties of perjury that, among other things, it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code).
Information reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale or other disposition of our common stock by a non-U.S. holder outside the United States
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through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a non-U.S. holder sells or otherwise disposes of its shares of our common stock through a U.S. broker or the U.S. offices of a foreign broker, the broker will generally be required to report the amount of proceeds paid to the non-U.S. holder to the Internal Revenue Service and also backup withhold on that amount unless such non-U.S. holder provides appropriate certification to the broker of its status as a non-U.S. person or otherwise establish an exemption (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code). Information reporting will also apply if a non-U.S. holder sells its shares of our common stock through a foreign broker deriving more than a specified percentage of its income from U.S. sources or having certain other connections to the United States, unless such broker has documentary evidence in its records that such non-U.S. holder is a non-U.S. person and certain other conditions are met, or such non-U.S. holder otherwise establishes an exemption (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code).
Backup withholding is not an additional income tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder generally can be credited against the non-U.S. holders U.S. federal income tax liability, if any, or refunded, provided that the required information is furnished to the Internal Revenue Service in a timely manner. Non-U.S. holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.
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We are offering the shares of common stock described in this prospectus supplement through a number of underwriters. J.P. Morgan Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, UBS Securities LLC and Wachovia Capital Markets, LLC are acting as joint book-running managers of the offering and as representatives of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus supplement, the number of shares of common stock listed next to its name in the following table:
Name |
Number of Shares | |
J.P. Morgan Securities Inc. |
||
Goldman, Sachs & Co. |
||
Morgan Stanley & Co. Incorporated |
||
UBS Securities LLC |
||
Wachovia Capital Markets, LLC |
||
Total |
||
The underwriters are committed to purchase all the common shares offered by us if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.
The underwriters propose to offer the common shares directly to the public at the initial public offering price set forth on the cover page of this prospectus supplement and to certain dealers at that price less a concession not in excess of $ per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $ per share from the initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the United States may be made by affiliates of the underwriters.
The underwriters have an option to buy up to additional shares of common stock from us to cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus supplement to exercise this over-allotment option. If any shares are purchased with this over-allotment option, the underwriters will purchase shares in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.
The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting fee is $ per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters option to purchase additional shares.
Without over-allotment exercise |
With full over-allotment exercise | |||||
Per Share |
$ | $ | ||||
Total |
$ | $ |
We estimate that our total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $6,000,000.
A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to
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allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.
We have agreed that we will not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exercisable or exchangeable for any shares of our common stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of any shares of common stock (regardless of whether any of these transactions are to be settled by the delivery of shares of common stock or such other securities, in cash or otherwise), in each case without the prior written consent of J.P. Morgan Securities Inc. for a period of 90 days after the date of this prospectus supplement. The foregoing restriction will not apply to (a) the shares of common stock to be issued and sold in this offering, (b) the grant or issuance of stock options or other securities pursuant to or in connection with any employment contract, benefit plan or similar arrangement with or for the benefit of employees, officers, directors or consultants in effect on the date of this prospectus supplement or any employment contract, benefit plan or similar arrangement adopted after the date of this prospectus to facilitate any merger or acquisition transaction described in this prospectus supplement or any documents incorporated by reference in the registration statement of which the accompanying prospectus is a part, (c) sales or issuances of securities pursuant to contractually binding requirements or agreements in effect on the date of this prospectus supplement, including, but not limited to, the Merger Agreement, (d) any issuance or commitment to issue securities in connection with any merger or acquisition transaction described in this prospectus supplement or any documents incorporated by reference in the registration statement of which the accompanying prospectus is a part, or (e) any issuance that is the result of an exchange or conversion of any class or series of capital stock for any other series of capital stock pursuant to the terms of such capital stock in effect on the date of this prospectus supplement.
Our directors and executive officers have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons, with limited exceptions, for a period of 60 days after the date of this prospectus supplement, may not, without the prior written consent of J.P. Morgan Securities Inc., (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock (including any shares of common stock which may be deemed to be beneficially owned by such individual in accordance with SEC rules and any shares of common stock which may be issued upon exercise of a stock option or warrant) or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise. The foregoing restrictions shall not apply to (a) bona fide gifts, (b) dispositions to any trust for the direct or indirect benefit of the applicable director or executive officer and/or a member of his or her immediate family, (c) the transfer or intestate succession to the legal representatives or a member of the immediate family of the applicable director or executive officer, (d) the sale pursuant to any existing contract, instruction or plan that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the Securities Exchange Act of 1934 (a Plan), (e) the establishment of any Plan, provided that no sales of common stock or securities convertible into, or exchangeable or exercisable for, common stock, shall be made pursuant to a Plan prior to the expiration of the 60-day period if such Plan was established after the date of this prospectus supplement, (f) dispositions from any grantor retained annuity trust established for the direct benefit of the applicable director or executive officer and/or a member of his or her immediate family pursuant to the terms of such trust, (g) the distribution to any partnership, corporation or limited liability company controlled by the applicable director or executive officer or by a member of his or her immediate family, (h) the disposition pursuant to an existing pledge of common stock or securities convertible into, or exchangeable or exercisable for, common stock as security for a margin account pursuant to the terms of such account, and (i) the exercise pursuant to Wells Fargos existing stock option plans effected by means of net
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share settlement or by the delivery or sale of shares of Wells Fargo common stock held by the applicable director or executive officer; provided that, in the case of any gift, disposition, transfer or distribution pursuant to clause (a) (other than in the case of charitable gifts to not-for- profit organizations), (b), (c) or (g), each donee, transferee or distributee shall execute and deliver to the representatives a lock-up agreement containing the foregoing terms; and provided further, that, in the case of any gift, disposition, Plan or distribution pursuant to clause (a), (b), (e) or (g), no filing by any party under the Securities Exchange Act of 1934, as amended, or other public announcement shall be required or shall be made voluntarily in connection with such gift, disposition, Plan or distribution (other than a filing on a Form 5 made after the expiration of the 60-day period referred to above). For purposes of this paragraph, immediate family shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. In addition, such officers and directors have agreed that, without the prior written consent of J.P. Morgan Securities Inc. on behalf of the underwriters, they will not, during the period ending 60 days after the date of this prospectus supplement, make any demand for or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
Our common stock is listed on the New York Stock Exchange under the symbol WFC.
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress. These stabilizing transactions may include making short sales of the common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be covered shorts, which are short positions in an amount not greater than the underwriters over-allotment option referred to above, or may be naked shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act of 1933, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them. These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the NYSE, in the over-the-counter market or otherwise. Because certain of our affiliates that are broker dealers are participating in this offering and are members of the Financial Industry Regulatory Authority (FINRA) that are subject to the rules of the NYSE and because of their relationship to us, they are generally not permitted under the rules of the NYSE to make markets in or recommendations regarding the purchase or sale of our common stock. Similarly, financial advisors employed by these underwriters or any of their affiliates will not be permitted to provide any advice in connection with managing any position in our common stock.
Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and
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other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.
Certain of our affiliates that are broker dealers, including Wachovia Capital Markets, LLC, a subsidiary of Wachovia, are members of FINRA and are participating in distributions of the offered securities. Accordingly, offerings of offered securities in which such affiliates or any other U.S. broker-dealer subsidiary of ours or our affiliates participate will conform to the requirements set forth in Rule 2720 of the Conduct Rules of the FINRA. Under Rule 2720, the underwriters are not permitted to sell shares of common stock in this offering to an account over which it exercises discretionary authority without the prior written approval of the customer to which the account relates.
Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus supplement and the accompanying prospectus may not be offered or sold, directly or indirectly, nor may this prospectus supplement, the accompanying prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus supplement or the accompanying prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus supplement and the accompanying prospectus. This prospectus supplement and the accompanying prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus supplement and the accompanying prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This document has not been lodged with the Australian Securities & Investments Commission and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:
a. | you confirm and warrant that you are either: |
i. | a sophisticated investor under section 708(8)(a) or (b) of the Corporations Act 2001 (Cth) of Australia (Corporations Act); |
ii. | a sophisticated investor under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountants certificate to the company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made; |
iii. | a person associated with the company under section 708(12) of the Corporations Act; or |
iv. | a professional investor within the meaning of section 708(11)(a) or (b) of the Corporations Act, |
and, to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act, any offer made to you under this document is void and incapable of acceptance.
b. | you warrant and agree that you will not offer any of the shares issued to you pursuant to this document for resale in Australia within 12 months of those shares being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act. |
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Austria
This document serves marketing purposes and constitutes neither an offer to sell nor a solicitation to buy any securities. There is no intention to make a public offer in Austria. Should a public offer be made in Austria, a prospectus prepared in accordance with the Austrian Capital Market Act will be published.
The shares of common stock may only be offered in the Republic of Austria in compliance with the provisions of the Austrian Capital Market Act and any other laws applicable in the Republic of Austria governing the offer and sale of the shares of common stock in the Republic of Austria. The shares of common stock are not registered or otherwise authorized for public offer under the Capital Market Act or any other relevant securities legislation in Austria. The recipients of this Prospectus and other selling materials in respect to the shares of common stock have been individually selected and identified before the offer being made and are targeted exclusively on the basis of a private placement. Accordingly, the shares of common stock may not be, and are not being, offered or advertised publicly or offered similarly under either the Capital Market Act or any other relevant securities legislation Austria. This offer may not be made to any other persons than the recipients to whom this document is personally addressed. This Prospectus and other selling materials in respect to the shares of common stock may not be issued, circulated or passed on in Austria to any person except under circumstances neither constituting a public offer of, nor a public invitation to subscribe for, the shares of common stock. This Prospectus has been issued to each prospective investor for its personal use only. Accordingly, recipients of this Prospectus are advised that this Prospectus and any other selling materials in respect to the shares of common stock shall not be passed on by them to any other person in Austria.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), from and including the date on which the European Union Prospectus Directive (the EU Prospectus Directive) is implemented in that Relevant Member State (the Relevant Implementation Date) no underwriter has made or will make an offer of securities described in this prospectus to the public in that Relevant Member State, except that an underwriter may, with effect from and including the Relevant Implementation Date, make an offer of such securities to the public in that Relevant Member State at any time:
| to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
| to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000 and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; |
| to fewer than 100 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive) subject to obtaining the prior consent of the book-running managers for any such offer; or |
| in any other circumstances falling within Article 3 of the EU Prospectus Directive; |
provided that no such offer of the securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the EU Prospectus Directive.
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For the purposes of this provision, the expression an offer of securities to the public in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State and the expression European Union Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
France
This prospectus supplement has not been prepared in the context of a public offering of securities in France (appel public à lépargne) within the meaning of Article L.411-1 and seq. of the French Code monétaire et financier and Articles 211-1 and seq. of the Autorité des marchés financiers (AMF) regulations and has therefore not been submitted to the AMF for prior approval or otherwise. The shares of common stock have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France and neither this prospectus supplement nor any other offering material relating to the securities has been distributed or caused to be distributed or will be distributed or caused to be distributed to the public in France, except only to persons licensed to provide the investment service of portfolio management for the account of third parties and/or to qualified investors (as defined in Article L.411-2, D.411-1 and D.411-2 of the French Code monétaire et financier) and/or to a limited circle of investors (as defined in Article L.411-2, D.411-4 of the French Code monétaire et financier) on the condition that no such Offering Memorandum nor any other offering material relating to the securities shall be delivered by then to any person nor reproduced (in whole or in part). Such qualified investors are notified that they must act in that connection for their own account in accordance with the terms set out by Article L.411-2 of the French Code monétaire et financier and by Article 211-4 of the AMF Regulations and may not re-transfer, directly or indirectly, the securities in France, other than in compliance with applicable laws and regulations and in particular those relating to a public offering (which are, in particular, embodied in Articles L.411-1, L.412-1 and L.621-8 and seq. of the French Code monétaire et financier).
Germany
Any offer or solicitation of shares of common stock within Germany must be in full compliance with the German Securities Prospectus Act (Wertpapierprospektgesetz WpPG). The offer and solicitation of securities to the public in Germany requires the approval of the prospectus and prospectus supplement by the German Federal Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht BaFin). This prospectus supplement has not been and will not be submitted for approval to the BaFin. This prospectus supplement does not constitute a public offer under the German Securities Prospectus Act (Wertpapierprospektgesetz). This prospectus supplement and any other document relating to the shares of common stock, as well as any information contained therein, must therefore not be supplied to the public in Germany or used in connection with any offer for subscription of the shares of common stock to the public in Germany, any public marketing of the shares of common stock or any public solicitation for offers to subscribe for or otherwise acquire the shares of common stock. The prospectus and other offering materials relating to the offer of the shares of common stock are strictly confidential and may not be distributed to any person or entity other than the designated recipients hereof.
Hong Kong
The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No
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advertisement, invitation or document, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) has been issued or will be issued in Hong Kong or elsewhere other than with respect to the shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance.
WARNING
The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.
Italy
The offering of the shares of common stock has not been registered with the Commissione Nazionale per le Società e la Borsa (CONSOB), in accordance with Italian securities legislation. Accordingly, the shares of common stock may not be offered or sold, and copies of this offering document or any other document relating to the shares of common stock may not be distributed in Italy except to Qualified Investors, as defined in Article 2, paragraph 2, letter e), (i), (ii) and (iii) of EU Directive 2003/71/EC or in any other circumstance where an express exemption to comply with public offering restrictions provided by Legislative Decree no. 58 of February 24, 1998 (the Consolidated Financial Act) or CONSOB Regulation no. 11971 of May 14, 1999, as amended (the Issuers Regulation) applies, including those provided for under Article 100 of the Finance Law and Article 33 of the Issuers Regulation, and provided, however, that any such offer or sale of the shares of common stock or distribution of copies of this offering document or any other document relating to the shares of common stock in Italy must (i) be made in accordance with all applicable Italian laws and regulations, (ii) be conducted in accordance with any relevant limitations or procedural requirements that CONSOB may impose upon the offer or sale of the shares of common stock, and (iii) be made only by (a) banks, investment firms or financial companies enrolled in the special register provided for in Article 107 of Legislative Decree no. 385 of September 1, 1993, to the extent duly authorized to engage in the placement and/or underwriting of financial instruments in Italy in accordance with the Consolidated Financial Act and the relevant implementing regulations; or (b) foreign banks or financial institutions (the controlling shareholding of which is owned by one or more banks located in the same EU Member State) authorized to place and distribute securities in the Republic of Italy pursuant to Articles 15, 16 and 18 of the Banking Act, in each case acting in compliance with all applicable laws and regulations.
Japan
Our securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the FIEL) and our securities will not be offered or sold, directly or indirectly, in Japan, or to, or for the account or benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan, or to or for the account or benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable laws, regulations and ministerial guidelines of Japan.
Korea
The shares of common stock may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Securities and Exchange Act and the Foreign Exchange Transaction Law and the decrees and regulations thereunder. The shares of common stock have not been registered with the Financial Supervisory Commission of Korea for public offering in Korea. Furthermore,
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the shares of common stock may not be re-sold to Korean residents unless the purchaser of the shares of common stock complies with all applicable regulatory requirements (including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of the shares of common stock.
Malaysia
The offer of shares in Malaysia constitutes or relates to an excluded offer, excluded invitation or excluded issue pursuant to Section 229 and Section 230 of the Capital Markets and Services Act 2007 and as a consequence: (i) no prospectus is required to be registered with the Securities Commission of Malaysia; (ii) any document(s) which purport to describe the business and affairs of Wells Fargo & Company (the issuer) in respect of the offer or issue of shares will constitute an information memorandum; and (iii) a copy of the information memorandum is required to be deposited by Wells Fargo & Company with the Securities Commission of Malaysia within seven days after it is first issued in Malaysia.
The distribution in Malaysia of this prospectus supplement (Documents), constituting the information memorandum, is subject to Malaysian laws. Save as aforementioned, no action has been taken in Malaysia under its securities laws in respect of the Documents. The Documents do not constitute and may not be used for the purpose of a public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the approval of the Securities Commission or registration of a prospectus with the Securities Commission in Malaysia under the Capital Markets and Services Act 2007.
The Netherlands
The shares of common stock may not, directly or indirectly, be offered or acquired in the Netherlands and this offering memorandum may not be circulated in the Netherlands, as part of an initial distribution or any time thereafter, other than to individuals or (legal) entities who or which qualify as qualified investors within the meaning of Article 1:1 of the Financial Supervision Act (Wet op het financieel toezicht) as amended from time to time.
Peoples Republic of China
This offering memorandum has not been and will not be circulated or distributed in the Peoples Republic of China, or PRC. None of the securities have been offered or sold, and will not be offered or sold, directly or indirectly, to any person for re-offering or resale to any resident of the PRC except pursuant to applicable laws and regulations of the PRC. For the purposes of this paragraph, the PRC does not include Hong Kong, Macau and Taiwan.
Poland
This document and any related documents have not been approved in Poland and may not be, by any means or in any manner, distributed or circulated or communicated to, and the securities may not be offered or sold to, any member of the public in Poland other than qualified investors defined in Art. 8 of the Act of 29 July 2005 on Public Offers and the Conditions of Introducing Financial Instruments to an Organized Trading System and on Public Companies, or investors each of whom acquires securities whose value, as calculated according to their issue or sale price, is not less than 50,000 or the Polish Zloty equivalent calculated on the basis of the average euro exchange rate published by the National Bank of Poland on the pricing date.
No permit has been obtained from the Polish Financial Supervisory Commission (the FSC) in relation to the issue of the common stock nor has the issue of the common stock been notified to the FSC in accordance with applicable procedures. Accordingly, the common stock may not be publicly offered Poland, as defined in the Polish Act on Public Offerings and on the Conditions of Introducing Financial Instruments to an Organized
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Trading System and on Public Companies of 29 July 2005 (as amended) as an offering to sell or purchase of securities, made in any form and by any means, if the offering is directed at 100 or more people or at an unnamed addressee (a Public Offering). Each Investor confirms that it is aware that no such permit has been obtained nor such notification made, and represents that it has not offered, sold or delivered and shall not offer, sell or deliver the common stock in Poland in the manner defined as a Public Offering as part of their initial distribution or otherwise to residents of Poland or in Poland. Each Investor acknowledges that the acquisition and holding of the common stock by residents of Poland may be subject to restrictions imposed by Polish law (including foreign exchange regulations), and that the offers and sales of the common stock to Polish residents or in Poland in secondary trading may also be subject to restrictions.
Singapore
The offer or invitation which is the subject of this document is only allowed to be made to the persons set out herein. Moreover, this document is not a prospectus as defined in the Securities and Futures Act, Chapter 289 of Singapore (the SFA) and accordingly, statutory liability under the SFA in relation to the content of this document will not apply.
As this document has not been and will not be lodged with or registered as a document by the Monetary Authority of Singapore, this document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common stock may not be circulated or distributed, nor may the common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than: (i) to an institutional investor under Section 274 of the SFA; (ii) to a relevant person, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions, specified in Section 275 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the common stock are subscribed or purchased under Section 275 of the SFA by a relevant person who is:
(a) | a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
(b) | a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, |
shares, debentures and units of shares and debentures of that corporation or the beneficiaries rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the common stock under Section 275 of the SFA except:
(1) | to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets; |
(2) | where no consideration is given for the transfer; or |
(3) | by operation of law. |
By accepting this document, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth above and agrees to be bound by the limitations contained herein. Any failure to comply with these limitations may constitute a violation of law.
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Spain
Neither our securities nor this offering memorandum have been approved or registered in the administrative registries of the Spanish National Securities Exchange Commission (Comision Nacional del Mercado de Valores). Accordingly, the securities may not be offered in Spain except in circumstances which do not constitute a public offer of securities in Spain within the meaning of articles 30bis of the Spanish Securities Market Law of 29 July 1988 (Ley 24/1988, de 28 de Julio, del Mercado de Valores), as amended and restated, and supplemental rules enacted thereunder.
Switzerland
This document does not constitute a prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. The shares of common stock of Wells Fargo & Company may not be sold directly or indirectly in or into Switzerland except in a manner which will not result in a public offering within the meaning of the Swiss Code of Obligations. Neither this document nor any other offering materials relating to the shares of common stock may be distributed, published or otherwise made available in Switzerland except in a manner which will not constitute a public offer of the shares of common stock of Wells Fargo & Company in Switzerland.
Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.
United Kingdom
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
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Mary Schaffner, who is our Senior Company Counsel, or another of our lawyers will issue an opinion about the legality of our common stock offered by this prospectus supplement. Ms. Schaffner owns, or has the right to acquire, a number of shares of our common stock which represents less than 0.1% of the total outstanding common stock. Wachtell, Lipton, Rosen & Katz, special counsel to Wells Fargo, will pass on certain legal matters in connection with the common stock offered by this prospectus supplement. Cravath, Swaine & Moore LLP, New York, New York, has represented the underwriters.
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PROSPECTUS
WELLS FARGO & COMPANY
420 Montgomery Street
San Francisco, California 94163
(866) 249-3302
Common Stock
You should read this prospectus and the applicable prospectus supplement carefully before you invest.
Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Wells Fargo & Companys common stock is traded on the New York Stock Exchange under the symbol WFC.
Investing in our securities involves risk. You should carefully review the risks and uncertainties described under the heading Risk Factors contained in the applicable prospectus supplement and any related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this prospectus.
These securities are not savings accounts, deposits or other obligations of any of our bank or non-bank subsidiaries and are not insured by the Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other governmental agency.
This prospectus is dated October 30, 2008.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Wells Fargo & Company filed with the Securities and Exchange Commission, or the SEC, using a shelf registration process. Under this shelf registration process, we may sell common stock in one or more offerings.
Each time we sell common stock, we will provide a prospectus supplement that will contain specific information about the terms of that offering. Such prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement together with the additional information described under the heading Where You Can Find More Information.
When we refer to Wells Fargo, our company, we, our and us in this prospectus, we refer only to Wells Fargo & Company, and not Wells Fargo & Company together with its subsidiaries, unless the context indicates otherwise.
The registration statement that contains this prospectus, including the exhibits to the registration statement, contains additional information about us and the securities offered under this prospectus. That registration statement can be read at the SEC website or at the SEC offices mentioned under the heading Where You Can Find More Information.
The distribution of this prospectus and the applicable prospectus supplement and the offering of the securities in certain jurisdictions may be restricted by law. Persons into whose possession this prospectus and the applicable prospectus supplement come should inform themselves about and observe any such restrictions. This prospectus and the applicable prospectus supplement do not constitute, and may not be used in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SECs web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. Our SEC filings are also available at the offices of the New York Stock Exchange. For further information on obtaining copies of our public filings at the New York Stock Exchange, you should call (212) 656-3000.
We incorporate by reference into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus. Information that we file subsequently with the SEC will automatically update this prospectus. In other words, in the case of a conflict or inconsistency between information set forth in this prospectus and information incorporated by reference into this prospectus, you should rely on the information contained in the document that was filed later. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, after the date of this prospectus and prior to the later of (i) the time that we sell all the securities offered by this prospectus and (ii) the date that our broker-dealer subsidiaries cease offering securities in market-making transactions pursuant to this prospectus (other than any portions of any such documents that are not deemed filed under the Exchange Act in accordance with the Exchange Act and applicable SEC rules):
| Annual Report on Form 10-K for the year ended December 31, 2007, filed on February 29, 2008, including information specifically incorporated by reference into our Form 10-K from our 2007 Annual Report to Stockholders and our definitive Proxy Statement for our 2008 Annual Meeting of Stockholders; |
| Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008, filed on May 9, 2008, August 8, 2008 and October 30, 2008, respectively; |
| Current Reports on Form 8-K filed on January 16, 2008, January 24, 2008, January 31, 2008, March 7, 2008, March 12, 2008, March 18, 2008, April 16, 2008, April 23, 2008, May 5, 2008, May 5, 2008, May 5, 2008, May 6, 2008, May 19, 2008, May 28, 2008, June 6, 2008, June 13, 2008, July 16, 2008, August 19, 2008, August 26, 2008, August 28, 2008, September 8, 2008, September 10, 2008, September 15, 2008, September 29, 2008, October 3, 2008, October 9, 2008, October 15, 2008, October 30, 2008, and October 30, 2008; and |
| the description of our common stock contained in Exhibit 99(e) to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May 8, 2003, including any amendments or reports filed to update such description. |
You may request a copy of these filings, other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing, and we will provide to you at no cost to you, by writing to or telephoning us at the following address:
Laurel A. Holschuh
Corporate Secretary
Wells Fargo & Company
Wells Fargo Center
MAC #N9305-173
Sixth and Marquette
Minneapolis, Minnesota 55479
Phone: (612) 667-8655
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You should rely only on the information incorporated by reference or presented in this prospectus or the applicable prospectus supplement. Neither we, nor any underwriters or agents, have authorized anyone else to provide you with different information. We may only use this prospectus to sell securities if it is accompanied by a prospectus supplement. We are only offering these securities in jurisdictions where the offer is permitted. You should not assume that the information in this prospectus or the applicable prospectus supplement is accurate as of any date other than the dates on the front of those documents.
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net proceeds from the sale of the offered securities will be added to our general funds and will be available for general corporate purposes, including (i) investments in or advances to our existing or future subsidiaries, (ii) repayment of obligations that have matured, and (iii) reducing our outstanding commercial paper and other debt.
LEGAL OPINIONS
Jeannine E. Zahn, who is our Senior Counsel, or another of our lawyers, will issue an opinion about the legality of our common stock offered by this prospectus. Ms. Zahn owns, or has the right to acquire, a number of shares of our common stock which represents less than 0.1% of the total outstanding common stock.
EXPERTS
The consolidated financial statements of Wells Fargo & Company and subsidiaries as of December 31, 2007 and 2006, and for each of the years in the three-year period ended December 31, 2007, and managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2007 have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in auditing and accounting. The audit report on the aforementioned consolidated financial statements, dated February 25, 2008, refers to Wells Fargos change in the method of accounting for income taxes, leveraged lease transactions, certain mortgages held for sale and retained interests, and Wells Fargos additional disclosure regarding the measurement of fair value for financial assets and liabilities in 2007 and refers to a change in the method of accounting for residential mortgage servicing rights and stock-based compensation in 2006.
The consolidated financial statements of Wachovia Corporation and subsidiaries (Wachovia) as of December 31, 2007 and 2006, and for each of the years in the three-year period ended December 31, 2007, and managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2007 have been incorporated by reference herein from Wells Fargo and Companys Form 8-K dated October 30, 2008 in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The audit report on the aforementioned consolidated financial statements, dated February 25, 2008, refers to Wachovias change in the method of accounting for income tax uncertainties, leveraged leases, hybrid financial instruments, collateral associated with derivative contracts and life insurance in 2007 and refers to a change in the method of accounting for mortgage servicing rights, stock-based compensation and pension and other postretirement plans in 2006.
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