Wachovia: One Thompson Deal Too Many

In his first five years as chief executive of First Union—later to become Wachovia (WB)—Ken Thompson was the antithesis of a big-bank CEO. While his predecessor, Ed Crutchfield Jr., famously said that during merger negotiations he "just kept stacking billion-dollar bills on the table" until the other party relented—a bet-the-bank approach that led to his ouster in 2000—Thompson was a master at carefully hedging his every bet.

Just a year into the job at First Union, Thompson deftly talked fellow North Carolina bank Wachovia into a "merger of equals." The deal gave Wachovia shareholders a scant 6% premium for their shares. (Thompson also took Wachovia's name for the combined bank, allowing him to bury the First Union brand, which had become tarnished by Crutchfield's disastrous dealmaking.) And in 2003, Thompson convinced Prudential Financial to enter a joint venture that pooled Prudential's 4,400 retail brokers with Wachovia's middling brokerage operations—without requiring Thompson to write a check. That gave Thompson a coast-to-coast network of 12,000 brokers to peddle Wachovia's mortgages, car loans, and other consumer-banking products as well as securities, for just the $400 million it would cost to close redundant branches and combine computer systems.