Posted on 10/03/2008 8:57:03 AM PDT by NCjim
NEW YORK — Citigroup on Friday demanded that Wachovia call off its proposed $15.1 billion merger with Wells Fargo, saying it has an exclusive deal to buy the Charlotte-based bank.
Wachovia's announcement early Friday of the all-stock deal with San Francisco-based Wells Fargo & Co. was an abrupt reversal that trumped Citigroup's plan to acquire Wachovia's banking operations with government assistance.
The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells Fargo deal for Wachovia will be done without it. Shares of Wachovia and Wells rose in morning trading, while Citigroup shares fell.
"This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement.
Citigroup issued a statement that said the proposed merger between Wachovia and Wells Fargo was "in clear breach of an exclusivity agreement" between Citigroup and Wachovia.
"Citi was negotiating in good faith and nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction that was announced on Monday," the statement said. "The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia’s closing price on Thursday, Oct. 2. Citi has also been providing liquidity support to Wachovia Bank since Monday’s announcement."
(Excerpt) Read more at wral.com ...
Ping
Um, did Citibank have it in writing? lol
I long for the day when Bank of America is purchased. Don't see that happening at the moment.
Without the help of FDIC too. Isn’t that interesting. Let’s see how much MSM coverage that line gets. I may open an account at WF
*******
Wells Fargo evidently didn't get the memo. It's only JPM, Bank of America and Citi that are supposed to be scooping up these deposits and tasty assets with federal guarantees.
"Was negotiating"? "Nearly completed"??
LMAO!!!
Like they say, "Oral contracts aren't worth the paper they're not written on."
Wells Fargo eagerly soliciates new accounts from illegals aliens.
Public “demands” are a good indication Citi has no legal standing.
Also, a good indication Wells Fargo made a solid purchase with it’s all-stock offering.
Gosh, don’t ya just hate it when a free market works in spite of poor business decisions?
Paulson and Pelosi are saddened.
Bank of America will be bought by Bank of China. You will have to mail your payroll deposits to Beijing.
The Wells Fargo deal made more sense all along (for Wachovia!) but apparently WF had backed off and Wachovia was forced to go with Citi.
I'm betting this ends up with WF/Wachovia merging but paying Citi $$$.
In come the Arabs to the rescue, pouring huge capital into Citicorp.
The FDIC ( socialist insurers/regulators who remained mum on the sub prime fiasco in support of affirmative action sub prime morgage lending), fashions a deal for the new Arab influenced Citicorp.
Along comes Wells Fargo, ponies up 15.1 billion as a non sub prime mortage operations bank, and rides off into the sunset with its new Wachovia bride.
The Arabs are gnashing their teeth and sweating oil declines to $94.00 per bbl.
A small poetic justice.
Which is all the justice we will likely see for a very long time indeed.
The government is a definite playah in the markets.
Exactly.
Is Citi saying the the Government is telling Wachovia they must sell to Citi at a price less than $7/share?
I own some WB and if Citi wants to pay more than $7, I’m sure Wachovia will listen. Otherwise, take your FDIC and go home.
Bill Clinton disagrees.
But you also have something called the parol evidence rule which works in some circumstances, but not likely here.
North Carolina law recognizes oral contracts. It is correct that it has to be more than “he said, she said”.
Supporting documents, chain of events that reflect past business practice between two parties, etc.
I know. I recently won a rather large case based on oral contract.
However, where I suspect Citigroup is dead in the water is that the WB stockholders had to approve their buyout and have not done so. Therefore, it was not a done deal.
Further, there is no way a WB stockholder will take their deal now that WFC has made this offer.
If City runs it in the ground, all that will happen is that the WB stockholders will vote to reject them and then vote to accept the WFC offer.
So someone is off the track.
Does anyone have any idea what kind of financial shape that Regions Bank is in from all this mess? Honestly, I’m debating whether to deposit a sizeable amount of cash from Charles Schwab into my savings account, or hide it in my mattress and/or canning jars buried in the yard (tongue only slightly in cheek).
“Wells Fargo, ponies up 15.1 billion as a non sub prime mortage operations bank”
Wrong, they are one of the worst, especially giving mortgages to illegal aliens.
“Citi was negotiating in good faith”
Good Faith with the American taxpayer’s cash?
More proof the the big banks don’t need our money to save our economy.
Having participated in a few deals, I can’t imagine that there were not “terms sheets” circulated from the outset. Generally with disclaimers about not being binding, etc., but the terms sheets outline the deal on the major points that will be reflected in the final contract.
The question becomes was there a meeting of the minds and a binding agreement. Depending on how far the negotiations went, this could be similar to Pennzoil/Texaco case in the early 1980’s. There was a drafted but unsigned contract in that case but I doubt things had progressed to that stage with Citigroup, just given the time frame.
Jack
Jack
Sounds like someone has already figured out where the chips need to fall to bring about a specific outcome.
Wells is definitely exposed.
Wells is definitely exposed.
Shareholders had not approved the Citi deal and I doubt they would have. They definitely won’t now that the Wells Fargo deal is on the table. The government can’t force the Citi deal on the shareholders. Simple as that.
Wells just skipped ahead in the bailout ticket purchase line.
That has a whole bunch of feds in a tizzy.
I like that!
Watch the Feds come out and rail against Wells Fargo for its "Greed!"
What a laugh.
“Wells Fargo eagerly solicites new accounts from illegal aliens.”
Live right in the middle of them - EVERY bank in the area solicits them. Want to inquire about your bank account at BofA by phone, legals enter SS#, illegals don’t. It’s kind of like “pick your poison”. At least WF didn’t use bailout money to complete deal. If true, that at least says something for them.
Both buyer and seller knew that there could be no deal under their terms until the stockholders voted.
WB might be vulnerable to some smaller damages if they violated some valid agreements, such as maybe an agreement that WB would not use the Citi offer to shop for other offers....
But I doubt they can force their deal to go through.
The stockholders will kill that in the manner I described.
Ya, but their underwriting is better than any of the other major players and they mitigate their risk well.
I would hold off on that ne. They have a metric ton+ of Option ARMs and HELOCS that are in real trouble.
The angelic one, the Great Oracle From Omaha, owns a lot of WFC, and he’s now also a big stockholder in GS.
So, anything Warren touches will be saved by our tax dollars.
Bet on it.
Bwahaha ! Sold to you !
They are exposed on the west coast and a bit in FL.
Their loan portfolio is frighteningly loaded with seconds and Option ARMS on RE in very distressed areas.
Yes, I’m not sure how Wells Fargo has managed to convince everybody that they are so well-managed that they have no exposure - better spin control that the other banks, I guess. Or perhaps because the phrase “Option ARMS” hasn’t entered the national lexicon yet, everyone is still stuck on “subprime”.
Don't get me wrong. I have my personal and business operating accounts at Wells and have been doing business with them for 18 years, so I am not looking for them to implode any time soon. I just think that ALL banks involved in toxihybrid lending should be scrutinized. Too many people have been burned when they have assumed that their bank/investments are immune.
My employer (Lowe’s) does its banking through Wachovia, so everybody at the store has been watching this with great interest.
Link to the Wachovia/Citigroup exclusivity agreement.
http://media.charlotteobserver.com/smedia/2008/10/03/12/citipact.source.prod_affiliate.138.pdf
oh well....Citibank has to raise their offer 700% to match Wells Fargo.
The Bailout bill passed...these loans can be sold to the US Treasury now.
Someone should put a stagecoach up there...heehee.
Lowe’s is a good company - particularly when compared to Home Depot. It’s further to drive to Lowe’s but I will NEVER go to HD. Hope you all come out okay.
Re WF - I really am not going to open an account at WF. Have been with Compass for 21 years. Just keep enough in there to pay the bills so nobody is going to get rich off of me. Since I moved WF is just right around the corner versus 42 miles round trip to nearest Compass. TNX for the heads up. Suspected they were in trouble because of all the offers of a “free credit card” I’ve been getting from them daily tho.
yep
The other tell- if they offer CD rates well above the average...
Appreciate all my new knowledge from you all sooooooo much. TNX.
Not so fast! Today, Citi is down.
A word to Wells Fargo. What goes around comes around. None of the financials are a safe haven these days.
sw
Cry me a river. Citi wasn’t trying to buy Wachovia...they were trying to steal them.
We should. The CEO sent out an e-mail a few days ago, assuring everyone that everything was okay and that our paychecks will still go out on time. We are still planning on adding 75-85 new stores next year. This is down a bit from this year’s 120 stores, but we are starting to run out of places to put new stores.
“I’m betting this ends up with WF/Wachovia merging but paying Citi $$$. “
Was thinking the same thing today when the news was discussed, but there is an odd angle of the credibility of the varied federal entities involved being impacted, since they were involved with the WB./C deal.
I bet the next time the fdic sets up any liability-purchase of a troubled bank, the purchaser is going to insist on it being signed and notarized in blood by all involved.
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