SEATTLE & SAN FRANCISCO--(BUSINESS WIRE)--June 6, 2005--Washington
Mutual, Inc. (NYSE: WM), announced that it has entered into a
definitive agreement to acquire Providian Financial (NYSE: PVN) in a
stock and cash transaction valued at approximately $6.45 billion. The
transaction brings together two of the nation's leading financial
services companies focused on serving middle market consumers.
"Today's transaction enhances Washington Mutual's consumer banking
growth while strengthening our leadership position in the
middle-market customer segment," said Kerry Killinger, chairman and
chief executive officer of Washington Mutual. "Providian is a highly
profitable business with solid credit quality. Its focus on middle
market consumers makes Providian a natural fit for our business and a
winning combination for both companies' customers."
"This combination also helps to further diversify our balance
sheet and earnings by adding attractive, high-yielding credit card
assets, while improving our net interest margin and adding stable fee
income," added Killinger.
The transaction is expected to be accretive within a year on both
a GAAP and cash basis.
Washington Mutual said Providian will become the company's fourth
major business unit and will continue to operate out of its current
headquarters in San Francisco. Washington Mutual also said it plans to
retain Providian's management team and infrastructure, making the
integration low risk and allowing for a quick and seamless transition.
Under the terms of the agreement, shareholders of Providian will
receive consideration based on a fixed exchange ratio of .45
Washington Mutual common shares for each Providian share. The merger
consideration will be paid 89 percent in stock and 11 percent in cash.
The stock consideration will be determined by multiplying the fixed
.45 exchange ratio by 0.89, and the cash consideration will be
determined by multiplying the .45 ratio by the product of 0.11 and the
average closing stock price of Washington Mutual for the 10 trading
days immediately preceding completion of the merger. Based on the
closing price of Washington Mutual's stock on June 3, 2005, the
implied per share purchase price is $18.71.
Joseph Saunders, Providian's chairman and chief executive, will
continue to run the credit card business and will report directly to
Steve Rotella, Washington Mutual's president and chief operating
officer. Other members of Providian senior management team will also
be joining Washington Mutual.
"Providian's management has successfully developed innovative
products and services, while providing superior customer support,
strong underwriting and efficient operations," said Killinger.
"Retaining Providian's leadership team helps ensure strong credit
management and continuity of marketing expertise in the credit card
business, while allowing Washington Mutual's management to remain
focused on the priorities we've set forth for the entire company. We
are all committed to achieving our long-term targets, producing
top-tier performance in our industry and delivering superior long-term
Saunders said, "This transaction provides Providian shareholders
financially attractive terms while allowing us to take the card
business to the next level. Washington Mutual's size and resources
will allow us to operate with a lower cost structure and greater
efficiency than we could on our own. The compelling combination also
enables us to leverage the strength of Washington Mutual's nationally
recognized brand and utilize its more than 2,000 retail stores as a
new growth channel.
"Our success as an independent company is in large part due to the
dedication of our employees, whose efforts have made this next step
forward possible," added Saunders. "We're pleased that Providian and
our employees will be sharing our future with Washington Mutual, a
company that shares our vision and values."
The companies noted that Providian credit card customers should
expect business as usual. Their accounts, policies and payment
procedures remain unchanged.
The acquisition is expected to be completed in the fourth quarter
of 2005 and is subject to approval of Providian shareholders and
Lehman Brothers, Morgan Stanley, and the law firm Simpson Thacher
& Bartlett advised Washington Mutual, and Goldman, Sachs & Co.,
Citigroup Global Markets, and the law firm of Wachtell, Lipton, Rosen
& Katz advised Providian on the transaction.
Killinger and Saunders will host an analyst/investor conference
call this morning, June 6, at 7:30 a.m. Pacific Time. Analysts and
investors may dial in and participate in the question/answer session.
To access the call, please dial 1-888-396-2384. International callers
may dial 1-617-847-8711. The passcode "86950841" is required to access
the call. A listen-only live broadcast of the call also will be
available on the investor relations page of the company's Website at
A recording of the conference call will be available approximately
one hour after the conclusion of the call at 1-888-286-8010. Callers
from outside the United States may dial 1-617-801-6888. The passcode
"18243170" is required to access the replay.
About Washington Mutual
With a history dating back to 1889, Washington Mutual www.wamu.com
is a retailer of financial services that provides a diversified line
of products and services to consumers and commercial clients. At March
31, 2005, Washington Mutual and its subsidiaries had assets of $319.70
billion. Washington Mutual currently operates more than 2,400 retail
banking, mortgage lending, commercial banking and financial services
offices throughout the nation. Washington Mutual's press releases are
available at www.wamunewsroom.com.
San Francisco-based Providian www.providian.com is a leading
provider of credit cards to mainstream American consumers throughout
the United States. By combining experience, analysis and technology,
Providian seeks to build long-lasting relationships with its customers
by providing products and services that meet their evolving financial
Forward Looking Statements
Statements contained in this press release which are not
historical facts are forward-looking statements within the meaning of
the Providian Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, statements
about the benefits of the merger between Washington Mutual and
Providian, including future financial and operating results and
performance; statements about Washington Mutual's and Providian's
plans, objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified by
words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates", "will", "should", "may" or words of
similar meaning. These forward-looking statements are based upon the
current beliefs and expectations of Washington Mutual's and
Providian's management and are inherently subject to significant
business, economic and competitive uncertainties and contingencies,
many of which are difficult to predict and generally beyond the
control of Washington Mutual and Providian. In addition, these
forward-looking statements are subject to assumptions with respect to
future business strategies and decisions that are subject to change.
Actual results may differ materially from the anticipated results
discussed in these forward-looking statements.
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations
expressed in the forward-looking statements: (1) the businesses of
Washington Mutual and Providian may not be combined successfully, or
such combination may take longer, be more difficult, time-consuming or
costly to accomplish than expected; (2) the expected growth
opportunities and cost savings from the merger may not be fully
realized or may take longer to realize than expected; (3) operating
costs, customer losses and business disruption following the merger,
including adverse effects on relationships with employees, may be
greater than expected; (4) governmental approvals of the merger may
not be obtained, or adverse regulatory conditions may be imposed in
connection with governmental approvals of the merger; (5) the
stockholders of Providian may fail to approve the merger; (6) adverse
governmental or regulatory policies may be enacted; (7) competition
from other financial services companies in Washington Mutual's and
Providian's markets; and (8) general business and economic conditions,
including movements in interest rates, which could adversely affect
credit quality and loan originations. Additional factors that could
cause actual results to differ materially from those expressed in the
forward-looking statements are discussed in the 2004 Annual Reports on
Form 10-K of Washington Mutual and Providian filed with the Securities
and Exchange Commission and available at the SEC's Internet site
(http://www.sec.gov). Neither Washington Mutual nor Providian
undertakes any obligation to update any forward-looking statements to
reflect circumstances or events that occur after the date on which
such statements were made.
Important Legal Information
This communication is being made in respect of the proposed merger
transaction involving Washington Mutual and Providian. In connection
with the proposed transaction, Washington Mutual and Providian will
prepare a registration statement on Form S-4 containing a proxy
statement/prospectus for the shareholders of Providian to be filed
with the SEC, and each will be filing other documents regarding the
proposed transaction with the SEC as well. Before making any voting or
investment decision, investors are urged to read the proxy
statement/prospectus regarding the proposed transaction and any other
relevant documents carefully in their entirety when they become
available because they will contain important information about the
proposed transaction. The final proxy statement/prospectus will be
mailed to Providian's shareholders. The registration statement
containing the proxy statement/prospectus and other documents will be
available free of charge at the SEC's Internet site
(http://www.sec.gov). The proxy statement/prospectus (when it is
available) and the other documents may also be obtained for free by
accessing Washington Mutual's website at www.wamu.com under the tab
"About WaMu" and then under the heading "Investor Relations" or by
accessing Providian's website at www.providian.com under the tab
"About Providian" and then under the heading "Investor Relations."
Washington Mutual, Providian and their respective directors and
executive officers and other members of management and employees may
be deemed to be participants in the solicitation of proxies in respect
of the proposed transaction. Information regarding Washington Mutual's
directors and executive officers is available in Washington Mutual's
proxy statement for its 2005 annual meeting of shareholders, which was
filed with the SEC on March 23, 2005 and information regarding
Providian's directors and executive officers is available in
Providian's proxy statement for its 2005 annual meeting of
shareholders, which was filed with the SEC on March 31, 2005.
Information regarding the persons who may, under the rules of the SEC,
be considered participants in the solicitation of Providian
shareholders in connection with the proposed transaction will be set
forth in the proxy statement/prospectus when it is filed with the SEC.
CONTACT: Washington Mutual Contacts:
Alan Gulick, 206-377-3637
Alan Magleby, 212-326-6019
Alan Elias, 415-278-4189
Jack Carsky, 415-278-4977
SOURCE: Washington Mutual, Inc.