CHARLOTTE, N.C. (AP) _ The financial services company Wachovia Corp. on Monday said it agreed to acquire Westcorp, an automobile finance company based in Irvine, Calif., for $3.42 billion, creating the nation's ninth largest auto loan originator.
Wachovia also agreed to pay another $490 million for the 16 percent stake that Westcorp doesn't already own in WFS Financial Inc., boosting the combined value of the transactions of $3.9 billion.
The company said the deal for Westcorp is expected to boost earnings in the second year and produce an internal rate of return of more than 15 percent, above Wachovia's acquisition criteria.
Wachovia said its purchase of Westcorp will give it a small presence in the California retail banking market, while expanding its auto finance group into a national business. The firm will add about 8,500 automobile dealer clients, and about 920,000 individual customers.
``This transaction moves our auto finance business to a new level and gives us access to a new set of customers who can benefit from Wachovia's broad offering of financial services,'' said Ben Jenkins, president of Wachovia's general bank.
Wachovia, which expects the purchase to close in the first quarter, said the combined business will be run by WFS President and Chief Executive Thomas Wolfe and will be based in Irvine. Wolfe will report to Carlos Evans, head of Wachovia wholesale banking.