By Anurag Kotoky

BANGALORE (Reuters) - Wells Fargo and Co's (WFC.N: Quote, Profile, Research) acquisition of Wachovia Corp (WB.N: Quote, Profile, Research) will be a major positive for the company as the deal will expand its presence in the "structurally attractive" Southeast region, at least three analysts said.

Stifel Nicolaus upgraded Wells Fargo to "hold" from "sell" while RBC Capital Markets and Fox-Pitt Kelton retained their "outperform" rating after Citigroup (C.N: Quote, Profile, Research) abandoned its bid for Wachovia's banking assets, clearing the way for Wells Fargo.

"It (the Wachovia deal) provides Wells Fargo with the opportunity to become a national banking franchise at a much lower cost than cobbling several one-off transactions together," Stifel analyst Christopher Mutascio said in a note to clients.

The low cost of the acquisition and the tax benefits from it could allow the company to "manufacture earnings" that other banks can not do, in a more prolonged and broader-based economic downturn than originally anticipated, Mutascio said.

Citigroup (C.N: Quote, Profile, Research) on Thursday walked away from its brief but acrimonious battle with Wells Fargo over Wachovia, losing out on a deal crucial to strengthening its retail banking business but vowing to pursue up to $60 billion in legal claims. [nBNG395254]

CONFUSION ENDS

"This removes any confusion regarding how a potential breakup of Wachovia franchise to appease Citi and government might have worked in terms of logistics, legalities, and financials," Fox-Pitt analyst Andrew Marquardt said.

Marquardt said the deal is a "great" one for Wells Fargo as Wachovia has a strong legacy in retail, commercial and corporate banking, asset management and retail brokerage in the Southeast region.  Continued...