UPDATE 1-Wells Fargo sells $11 bln stock for Wachovia deal

(Adds details throughout about stock sale; byline)

By Jonathan Stempel

NEW YORK, Nov 6 (Reuters) - Wells Fargo & Co (WFC.N) on Thursday sold a greater-than-expected $11 billion of stock, one of the largest U.S. common stock offerings this year, to help fund its purchase of Wachovia Corp WB.N.

The 407.5 million-share offering was priced at $27 per share, 6.2 percent below Wells Fargo's Thursday closing price of $28.77 on the New York Stock Exchange. The shares fell $2.91 or 9.2 percent in regular trade, and fell another 87 cents to $27.90 after-hours.

Wells Fargo said on Thursday it may sell another 61 million shares to meet demand, boosting the offering to about $12.65 billion. The bank on Wednesday set plans to sell at least $10 billion of stock.

The stock sale followed a steep two-day slide in Wells Fargo's share price, and the 6.2 percent discount may depress the share price further on Friday. The $27 per share price is 23.1 percent below where the bank's shares closed on Tuesday.

San Francisco-based Wells Fargo has said it would raise as much as $20 billion to fund the purchase of Wachovia, which is now valued at about $12.4 billion. The U.S. Treasury Department subsequently said it would buy $25 billion of Wells Fargo preferred stock as part of its bank bailout plan.

The banks valued Wachovia at $15.1 billion when they announced the merger on Oct. 3.

Regulators had pressured Charlotte, North Carolina-based Wachovia to find a buyer after losses soared on a $118.7 billion portfolio of troubled adjustable-rate mortgages, and businesses and consumers started to rapidly withdraw deposits.

The merger is expected to close by year-end. It would create the nation's fourth-largest bank by assets, with $1.4 trillion of assets and 6,653 banking offices.

Analysts said Wells Fargo could use the newly raised capital to make more acquisitions, or even start to pay back the government before terms of the $25 billion infusion become too onerous.

Some analysts had speculated that Wells Fargo might not need to raise large amounts of capital for the merger because Wachovia's loan portfolio might fare better than Wells Fargo's initial assessment, which the bank itself has characterized as conservative.

Wells Fargo on Wednesday said it expects $71.4 billion of loan losses on Wachovia's $482.4 billion portfolio, down from its prior $74 billion forecast. But it also expects Wachovia's $418.8 billion deposit base to decline 21 percent by the start of 2010 as high-yielding certificates of deposit mature.

The bank on Thursday declined to elaborate on the offering or whether it plans to raise more capital.

JPMorgan arranged the Wells Fargo stock offering. Goldman Sachs & Co, Morgan Stanley, UBS and Wachovia Securities were joint bookrunners.

Despite this week's decline, Wells Fargo shares as of Thursday's close were down just 5 percent this year. The KBW Bank Index .BKX of larger U.S. lenders was down 40 percent. (Editing by Phil Berlowitz)