SAN FRANCISCO (AP) — Wachovia Corp., the nation’s fourth largest bank, is muscling into the West with a $25.5 billion deal to buy Golden West Financial Corp., a mom-and-pop shop that blossomed into a prized savings and loan.

The stock-and-cash acquisition, announced late Sunday, values Golden West at $81.07 per share - 15 percent above the company’s closing price last week on the New York Stock Exchange.

Golden West shares rose $5.37, or 7.6 percent, to $75.88 in early trading on the New York Stock Exchange. Wachovia shares fell $3.36, or 5.7 percent, to $56.03.

With the takeover, Charlotte, N.C.-based Wachovia would pick up a 285-branch network spanning 10 states that would fill a void in the company’s operations. Golden West earned $1.5 billion last year, primarily from making the adjustable rate mortgage loans that have been its bread and butter for decades.

Oakland, Calif.-based Golden West operates its branches as World Savings Bank - a brand that began to take shape 43 years ago when the husband-and-wife team of Herbert and Marion Sandler paid $4 million for a San Francisco Bay area savings and loan with just $34 million in assets and 25 employees.

Golden West now has $125 billion in assets and employs 11,600 workers under the leadership of the Sandlers, now in their mid-70s, who are still the company’s co-chief executive officers in one of corporate America’s most unique partnerships.

Wachovia has accounts established with 13.4 million households and businesses, but its 3,159 offices have been limited to 16 states concentrated in the East and South. The company acquired a small presence in California earlier this year with a $3.9 billion acquisition of auto lender Westcorp, which has 19 branches in southern California.

Buying Golden West will enable Wachovia to substantially expand its presence in California, where World Savings has 123 branches and $32 billion in deposits. The deal also will give Wachovia its first branches in Arizona, Colorado, Illinois, Kansas and Nevada.

If the deal goes through as expected late this year, Wachovia will control about $669 billion in assets and deposits of $390 billion.

There is little overlap between the two companies. Wachovia expects to close 55 branches and lay off 1,100 employees, leaving a combined payroll of 110,000 workers. The cost-cutting is expected to reduce the combined company’s expenses by $53 million annually.

“We’re very excited to partner with such strong management and with an extremely knowledgeable and diligent team of sales leaders,” Wachovia Vice Chairman Ben Jenkins said. “Customers will continue to be served by the same dedicated and passionate people who have always met their needs - only over time, they’ll have more products and services to choose from.”

A consumer rights coalition troubled by Wachovia’s lending practices already plans to ask federal regulators to block the Golden West takeover.

The Inner City Press/Community on the Move and the Fair Finance Watch asserts Wachovia unfairly imposes higher rates on home loans to African-Americans than non-Hispanic whites and finances pawn shops and payday lenders known for charging high rates for short-term loans to low-income households.

Big bank mergers commonly face objections from consumer groups, but the challenges rarely derail the deals.

The proposed sale resolves the question of what will happen to Golden West after the Sandlers retire - a question that had been dogging the company for several years. Herbert is 74 and Marion is 75.

“Wachovia is the company we selected to entrust with our legacy as one of the nation’s most admired and trusted financial institutions,” Herbert said. “We share the same values of operating with integrity, putting customers first and encouraging teamwork.”

The Sandlers own a combined 10.24 percent stake in Golden West, according to documents filed with the Securities and Exchange Commission. The sale will generate $2.6 billion for the couple.

The Sandlers and Marion’s brother, board member Bernard Osher, have agreed to vote their shares in favor of the sale, Wachovia said. Osher owns a 3.7 percent stake in Golden West.

If the marriage isn’t consummated, a $995 million breakup fee could be imposed.

The deal calls for Golden West shareholders to receive a cash payment of $18.75 per share and 1.051 shares of Wachovia stock for each of their shares. Wachovia’s shares finished last week at $59.39 on the New York Stock Exchange.