In an abrupt change of course, Wachovia Corp. said Friday it will be acquired by Wells Fargo & Co. in a $15.1 billion US all-stock deal, wiping out Wachovia's previous plan to sell its banking operations to Citigroup Inc.

A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have involved help from the Federal Deposit Insurance Corp.

The Wachovia-Wells Fargo deal, announced Friday, comes in a turbulent time for banks and financial firms as they grapple with the ongoing credit crisis, which led to the recent bankruptcy of Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc.

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Three-month stock chart for Wells Fargo

Wachovia shareholders will receive 0.1991 share of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock, valuing Wachovia at about $7 per share.

This is a nearly 80 per cent premium over the stock's Thursday closing price of $3.91, down from $10 last Friday before the Citigroup deal was announced.

On Monday, Citigroup agreed to buy Wachovia's banking operations for $2.16 billion in a deal orchestrated by the federal government. 

San Francisco-based Wells Fargo said it will record merger and integration charges of about $10 billion, but it expects earnings to be boosted within the first year after the acquisition closes. No government assistance is part of the deal terms.