Wells Fargo Wins Battle For Wachovia
Friday, October 10, 2008
Citigroup has walked away from its fight with Wells Fargo to purchase Wachovia. Citi announced last night that it had ended talks to acquire parts of the Charlotte, North Carolina-based bank, opening up the way for Wells Fargo to proceed with its recently announced plans to buy the struggling Wachovia in an all-company, all-stock $15.1 billion transaction.
Citi said yesterday that it would not block the merger between Wells Fargo and Wachovia, but it is planning to sue the two banks for “compensatory and punitive damages for bad faith breach of contract and tortious interference.” A litigation standstill between the three companies ended this morning.
Wachovia had initially announced a deal with Citigroup early last week – a purchase agreement facilitated and supported by the Federal Deposit Insurance Corporation (FDIC), in which Citi would have acquired only Wachovia's banking assets for $2.1 billion. According to Citi officials, Wachovia would have gone under had Citi not come to its rescue. Wachovia's decision to supplant the Citi agreement with the more attractive Wells deal sparked a week of debate and discussions between the three parties and federal regulators.
Citi's CEO Vikram Pandit commented that his organization did not seek out the Wachovia transaction. “Wachovia brought it to us,” he said.
In a statement issued by the bank, Citi said, “Without our willingness to engage in this transaction, hundreds of billions of dollars of value would have been seriously threatened. We stood by while others walked away. Now, our shareholders have been unjustly and illegally deprived of the opportunity the transaction created.”
Wells Fargo has submitted its application to the Federal Reserve Board seeking expedited approval of the Wachovia merger and the share exchange previously agreed, the two companies said in a joint statement. The banks said the merger is on schedule to be completed by the end of the fourth quarter.
Citi said yesterday that it would not block the merger between Wells Fargo and Wachovia, but it is planning to sue the two banks for “compensatory and punitive damages for bad faith breach of contract and tortious interference.” A litigation standstill between the three companies ended this morning.
Wachovia had initially announced a deal with Citigroup early last week – a purchase agreement facilitated and supported by the Federal Deposit Insurance Corporation (FDIC), in which Citi would have acquired only Wachovia's banking assets for $2.1 billion. According to Citi officials, Wachovia would have gone under had Citi not come to its rescue. Wachovia's decision to supplant the Citi agreement with the more attractive Wells deal sparked a week of debate and discussions between the three parties and federal regulators.
Citi's CEO Vikram Pandit commented that his organization did not seek out the Wachovia transaction. “Wachovia brought it to us,” he said.
In a statement issued by the bank, Citi said, “Without our willingness to engage in this transaction, hundreds of billions of dollars of value would have been seriously threatened. We stood by while others walked away. Now, our shareholders have been unjustly and illegally deprived of the opportunity the transaction created.”
Wells Fargo has submitted its application to the Federal Reserve Board seeking expedited approval of the Wachovia merger and the share exchange previously agreed, the two companies said in a joint statement. The banks said the merger is on schedule to be completed by the end of the fourth quarter.
