Sponsored Link:

Wells Fargo and Citigroup Continue to Battle for Wachovia

By Jennifer Yousfi
Managing Editor

The battle for battered bank Wachovia Corp. (WB) is heating up with Citigroup Inc.’s (C) win of a court order to extend negotiations, while Wells Fargo & Co. (WFC) contends its merger agreement still stands.

Late Saturday evening, Citi won a court order from New York State Supreme Court Justice Charles Ramos granting an injunction to extend the exclusive negotiation period between Citigroup and Wachovia.

The original agreement between Citi and Wachovia, reached with assistance and backing from the Federal Deposit Insurance Corp. (FDIC) did not include a signed merger agreement. However, it did grant Citi exclusive rights to negotiate with Wachovia through today (Monday).

Wells Fargo’s agreement with Wachovia was announced on Friday, well before the exclusive negotiation clause’s deadline. Despite this breach and the finding by the court, Wells Fargo remains confident in its agreement.

Sign up below…
and we’ll send you a new investment report for free:

“The Three Best Investments in Asia.”

"Wells Fargo and Wachovia have a firm, binding merger agreement,” Wells Fargo announced in a statement released yesterday (Sunday).

“We are confident that we will complete our announced merger with Wachovia. Nothing in the court’s temporary order impacts our ability to ultimately do that,” the statement read.

Wells Fargo’s $15 billion, or $7 a share, for all Wachovia operations easily trumps Citigroup’s $2.16 billion, or $1 per share, offer for just Wachovia’s deposits, loan portfolio, and retail banking branches. The Citigroup offer did not include Wachovia’s A.G. Edwards brokerage unit or Evergreen Investment Management Co. LLC mutual fund family.

Wells Fargo also has the advantage of not relying on any government assistance to complete its proposed merger with Wachovia.

But Wachovia did breach its original agreement with Citigroup.

“Any such agreement between Wachovia and Wells Fargo is illegal,” Vikram Pandi, chief executive officer of Citigroup, said after the Wells Fargo announcement on Friday.

However, given the two banks signed a non-binding term sheet, rather than a formal binding merger agreement, Citigroup might have little recourse unless it chooses to up its own bid for Wachovia.

“I’m still not convinced that Citigroup can force this sale to happen,” Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans and a former M&A lawyer at Sullivan & Cromwell, told Bloomberg News. “Citigroup may be facing the chance to get themselves a small settlement, and that’s a nice shot in the arm for a company that’s struggling.”

News and Related Story Links:

More on this topic (What's this?)
Wells Fargo (WFC) – show me the money (Dividend Growth Investor, 4/15/09)
Wells Fargo – is it worth what it is selling for ? (Bapcha's Stocks., 8/25/08)
Read more on Citigroup, Wells Fargo at Wikinvest
October 6th, 2008

Peter Schiff: Why this Money Should Replace the U.S. Dollar

There’s a new universal currency, backed by solid gold. You can use it to make online purchases anywhere in the world. Converting some money to the new currency takes just 5 minutes. You can start with as little as $10… or as much as $10 million.

According to CNBC star analyst and Euro Pacific Capital President Peter Schiff, this money could double the value of your savings – automatically – in just 6-9 months.

For Schiff’s full analysis and recommendations, please go here.




This entry was posted on Monday, October 6th, 2008 at 12:47 am and is filed under Top News. You can follow any responses to this entry through the RSS 2.0 feed. Due to the amount of comments we receive Money Morning will not be able to respond to all questions. If you have not already registered to leave a comment, once doing so you will receive Money Morning's Daily Email.

There Are 3 Responses So Far. »

  1. Pingback by Wells Fargo being Blocked | Spageto on 6 October 2008:

    [...] Wells Fargo and Citigroup Continue to Battle for Wachovia s (C) win of a court order to extend negotiations, while Wells Fargo… Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. Money moves markets. But Money Morning lets you move first. [...]

  2. Pingback by Temporary Litigation Halt as Citigroup and Wells Fargo Continue to Vie for Wachovia on 7 October 2008:

    [...] in New York, Citigroup’s court order, granted over the weekend to extend the exclusive negotiation period, was overturned in state appeals court. Citigroup [...]

  3. Pingback by Temporary Litigation Halt as Citigroup and Wells Fargo Continue to Vie for Wachovia | Jutia Group on 7 October 2008:

    [...] in New York, Citigroup’s court order, granted over the weekend to extend the exclusive negotiation period, was overturned in state appeals court. Citigroup [...]

Post a Response