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Wells Fargo, Citigroup vie for Wachovia

Mon., Oct. 6, 2008

WASHINGTON – Citigroup intensified its pursuit of Wachovia over the weekend even as the Charlotte bank continued to spurn Citigroup’s advances in favor of an acquisition by Wells Fargo.

A New York judge late Saturday night issued an order that Citigroup said suspended Wells Fargo’s deal for Wachovia on the grounds that Wachovia already had betrothed itself to Citigroup and was not allowed to talk with other suitors.

Wachovia responded Sunday with a federal lawsuit seeking affirmation of its right to accept Wells Fargo’s offer. Wells Fargo agreed to pay about $15 billion for all of Wachovia, a deal it prefers to Citigroup’s offer of about $2 billion for most, but not all, of the company.

U.S. District Court Judge John Koeltl gave the sides until today to file arguments.

The fight may well be resolved out of court. Communication continues among the companies and federal regulators, all of whom have vested interests in a quick resolution, according to people familiar with the matter who spoke on condition of anonymity because they’re not authorized to speak publicly. The fragile condition of the financial markets makes this a dangerous moment for uncertainty about three of the nation’s largest banks.

The companies staked out contradictory positions Sunday. Citigroup and Wells Fargo both insisted they held exclusive rights to Wachovia. Wells Fargo said it already had a deal. Citigroup said it was ready to resume negotiations.

Wachovia affirmed its commitment to the Wells Fargo deal but said it was still willing to listen to Citigroup.


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