Zacks_Analysts' Blog : Wells Fargo Completes Burdale Buy - Analyst Blog

Yesterday, Wells Fargo & Company (WFC) announced that it has accomplished the purchase of Burdale Financial Holdings Limited (Burdale) and the portfolio of Burdale Capital Finance Inc. from Bank of Ireland (IRE). The acquisition was part of the company’s effort to broaden its international commercial finance capabilities.

Headquartered in London, Burdale is a leading provider of comprehensive asset-based lending and operates in and across the UK marketplace. Following the deal closure, Burdale became part of the asset-based lending group of Wells Fargo – Wells Fargo Capital Finance.

The deal is a strategic fit for Wells Fargo. It would enable the company to broaden its horizon and expand its asset-based lending business into the UK. This would in turn help the company to serve its US-based customers doing business in the UK.

Last month, Wells Fargo reported its fourth quarter and full year 2011 financial results. The company’s fourth quarter earnings of 73 cents per share were a penny ahead of the Zacks Consensus Estimate.

Wells Fargo’s results were driven by a higher top line. Improved credit quality along with strong capital ratios were the positives during the reported quarter. However, increased operating expenses were the downsides.

Going forward, we believe that strategic acquisitions will help expand Wells Fargo’s business and improve its profitability. Its solid business model, strong capital position and expanded business through the Wachovia acquisition and its integration, expected expense management and improved credit quality will also support its profit figures. Yet a sluggish economic recovery and its impact on revenue might somewhat limit its growth.

Wells Fargo currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.