Wells Fargo and Norwest: “Merger of Equals” (A) Harvard Case Solution & Analysis

Wells Fargo and Norwest: “Merger of Equals” (A) Case Solution


This case is about the merger of equals between two leading banks Wells Fargo and Norwest. It is expected that both these financial corporations are considered as the 10th largest and 11th largest banks among peers respectively. Norwest Corporation is providing financial services, which include insurance, banking, mortgage and consumer finance in Canada, America and in many countries. Moreover, Norwest is also considered as the top performing bank over the last decade and is also considered as the most promising and successful bank in US.

On the other hand,Wells Fargo wasfounded in 1852 and is considered as the oldest bank in California. It is expected that Wells Fargo is famous for providing mail services and stagecoach services and plays an important role in safeguarding the Gold during the gold rush season of California which provides a significant reputation and customer’s bases around the US and becomes the largest consumer bank in US at the end of the year 1997. It is expected that Wells Fargo is the second largest holder of the consumer deposits in the California which makes the Wells Fargo as the most attractive bank in US with all respects.
It is expected that in the year 1998 both Wells Fargo and Norwest signed a merger of equals’ contract in order to develop a most diversified and larger financial services organization. This merger is considered as the most extensive merger which includes a stock deal of $34 billion which is considered as the most extensive and largest deal with respect to both banks. It is expected that this deal would expand the operations of both companies in Canada, America and in other countries while increasing the asset base, customers base, number of employees and number stores of both banks significantly.

It is expected that merger of Wells Fargo and Norwest would result in the 6th largest bank in the banking industry of US the name of newly merged bank will be Wells Fargo and Company.Moreover, itis also assumed that newly merged company will also be the largest Internet bank in US which makes this merger more valuable for the management of both companies.
The management of the both companies expected that this merger would help to attract new customers by providing more services with greater quality at one place which will provide greater satisfaction to the both existing and new customers. It is also expected that the increase in the customers base will provide greater returns to shareholders therefore, it is expected that the newly merged company will be able to satisfy the financials needs of all customers in a most economical way which is also the key purpose of proposed merger.

It is expected that this merger would result in the New CEO and chairman of the new company like, Richard is the chairman and CEO of the Norwest Company, but in the newly formed company he will be the president and CEO. Similarly Paul Hazen is the present CEO and chairman of Wells Fargo but he will be the chairman of the new company.
There are certain benefits of this merger with respect to both companies however,there are many barriers which could act as a hurdle with respect to strategic and business goals of both organizations as both banks have contrasting culture. In addition to this, Wells Fargo has a bad experience of previous mergers which could affect the financials of both companies adversely therefore; the managements of both companies are considering on how they could overcome such barriers through optimal integration strategy that would lead to an effective execution of proposed plan...................

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