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Citi Weighs Its Options, Including Firm's Sale
WSJ ^ | 11/21/08 | DAVID ENRICH

Posted on 11/20/2008 7:33:37 PM PST by TigerLikesRooster

Citi Weighs Its Options, Including Firm's Sale

By DAVID ENRICH

Executives at Citigroup Inc., faced with a plunging stock price, began weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright, according to people familiar with the matter.

The internal discussions are at a preliminary stage and don't signal that Citigroup's board and management are backing down from their insistence that the New York company has ample capital, funding and strategic direction, these people said. But with the stock down another 26% Thursday, its worst one-day percentage decline ever, Citigroup officials have decided they need to reckon with a range of scenarios that were unthinkable only weeks ago

(Excerpt) Read more at online.wsj.com ...


TOPICS: Breaking News; Business/Economy; Extended News; News/Current Events
KEYWORDS: bailout; banking; citi; failure; financialcrisi; financialcrisis; sale
Who is going to buy Citi?
1 posted on 11/20/2008 7:33:37 PM PST by TigerLikesRooster
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To: TigerLikesRooster; PAR35; bamahead; AndyJackson; Thane_Banquo; nicksaunt; MadLibDisease; ...

Ping!


2 posted on 11/20/2008 7:34:06 PM PST by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster
At this share price, Citi could be taken private tomorrow. It has $45 billion *per quarter* in cash flow from operations, in the worst financial climate in history. Buy in the whole thing and tell the shorts and CDS speculators to stuff themselves.
3 posted on 11/20/2008 7:36:14 PM PST by JasonC
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To: TigerLikesRooster

So much for the “one stop shop” for everything financial and insurance. I remember when they were creating this Frankenstein. Sandy Weil cobbled it together and it never really worked other than as a collection of pieces. It should be broken up.


4 posted on 11/20/2008 7:38:03 PM PST by Opinionated Blowhard
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To: TigerLikesRooster

Wow, isn’t Citi a Rockefeller bank, incorporated from the original Manhattan Bank charter?


5 posted on 11/20/2008 7:38:09 PM PST by Zuben Elgenubi
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To: JasonC
If that happens, would it create another Porsche-Volkswagen flap? I am just curious.
6 posted on 11/20/2008 7:39:29 PM PST by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster
Who is going to buy Citi?

The Bank of Uncle Sam, with headquarters in Washington D.C.
They've got loads of money (to print up).
7 posted on 11/20/2008 7:40:11 PM PST by Deo volente (On January 20, 2009 America moves to DEFCON 2.)
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To: TigerLikesRooster

So they are not going to sue my company anymore for $60 billion??


8 posted on 11/20/2008 7:41:18 PM PST by HereInTheHeartland (I can't wait for January 20, 2013")
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To: TigerLikesRooster
Bernanke loves to work on Sundays. I wonder if he is gonna buy it on Sunday.
9 posted on 11/20/2008 7:43:59 PM PST by BGHater (The GOP, the new DNC.)
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To: TigerLikesRooster
I was just looking at that. There are 138 million shares short that we know of. Options contracts might make that a round 200 million or so. But that is only about 4% of the company. For the amount squeezed from the shorts to equal the present market cap, the stock would have to recover to around $25. It is fairly worth $50 in normal times, but these aren't and it isn't worth $50 with the alternatives on offer, elsewhere.

But if I were them, I'd just start doing it, no announcements, no fanfare, no "here is how we will save the bank". Just start. In as little as 50 days, ever single share (not held by insiders if you like) could be retired. You could literally buy the entire thing before Obama is sworn in, even if it doesn't decline another penny. Without using a dime of money besides what the loan book in throwing off.

10 posted on 11/20/2008 7:44:50 PM PST by JasonC
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To: TigerLikesRooster

>>>>>Who is going to buy Citi? <<<<<<

Maybe the Bank of China or China Merchants Bank. /semi-sarc


11 posted on 11/20/2008 7:48:50 PM PST by angkor (Conservatism is not a religious movement.)
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To: TigerLikesRooster

‘xcuse me, but i can’t get over the irony that citi was

angry at wells fargo for beating them out to buy wachovia.


12 posted on 11/20/2008 7:53:02 PM PST by ken21 (people die and you never hear from them again.)
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To: TigerLikesRooster

Me


13 posted on 11/20/2008 7:56:06 PM PST by B4Ranch (("In politics, nothing happens by accident. If it happens, you can bet it was planned that way." FDR)
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To: ken21

that was j.p.morgan/chase


14 posted on 11/20/2008 7:57:04 PM PST by MEpajamaMONSTER (Growing old is mandatory; growing up is optional)
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To: JasonC

Do you think there’s anyone smart enough there to think of this?

And could they do this without an SEC requirement of disclosure?


15 posted on 11/20/2008 8:05:35 PM PST by NVDave
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To: MEpajamaMONSTER

>Wachovia logo:

>WELLS FARGO MERGER PROPOSAL MOVES FORWARD

>Wachovia CEO wrote an open letter to clients and shareholders on October 22, 2008, the day Wachovia reported its third quarter 2008 financial results.

that’s one link, even the wachovia ceo says his firm is being merged with wells fargo:

http://wachovia.com/misc/0,,2149,00.html

there are dozens of links concerning wells’ buy out of wachovia:

http://search.yahoo.com/search?p=wells+fargo+wachovia+merger&fr=yfp-t-501-s&toggle=1&cop=mss&ei=UTF-8


16 posted on 11/20/2008 8:06:22 PM PST by ken21 (people die and you never hear from them again.)
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To: TigerLikesRooster

Break it up into about 7 regional banks, a credit card division, and a real estate auction house. :)


17 posted on 11/20/2008 8:52:57 PM PST by RockinRight (Now it's my turn to have a psychotic, uncontrollable hatred for the President.)
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To: TigerLikesRooster

Then why are they trying to buy Chevy Chase Bank?


18 posted on 11/20/2008 8:53:09 PM PST by RockinRight (Now it's my turn to have a psychotic, uncontrollable hatred for the President.)
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To: TigerLikesRooster

This one has me down. I got in at 19+. the company has the assets and it looked like a hellofa bargain. Dang... I hope this turns around.


19 posted on 11/20/2008 9:16:17 PM PST by FunkyZero
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To: BGHater

They don’t have until Sunday. My guess the lines at the teller starts tomorrow. My guess a deal in the works tonight. I would not expect much since Lehman started at 2.00.


20 posted on 11/20/2008 9:52:45 PM PST by Orange1998
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To: TigerLikesRooster

Citigroup’s corporate management received billions from Big Banking benefactor Paulson. What management has done with their ‘free hand out’ nobody knows, yet they are issuing pink slips to at least 53000 employees (no CEO insiders need to worry).


21 posted on 11/20/2008 10:55:34 PM PST by M. Espinola (Freedom is not 'free'.)
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To: NVDave
Doubtful. They have been maximizing their liquidity. They knew enough to force epic cash flows in their direction, but assumed market participants would see what that means. They haven't. Instead said participants are all focused entirely on solvency measured in historical book value terms, apparently unaware that earning more on the asset than is paid on the liability is the source of banking profit and stability. Instead said outside participants are all thinking, "30 to 1 leverage, 4% price decline, bankrupt".

The solution is to show a profit, proving that liquidity can be cashed in for earnings at will. In this market, that is easy. Citi can borrow at 1-3% rates from the Fed or one CDs from savers, and buy in its own debt in the secondary market at 10%. Anyone can doubt whether every other bond in existence will really pay the 10-15% rates currently on offer, I suppose, but Citi isn't going to default to itself. They've got something like $400 billion in treasuries that have flown to the moon, yielding next to nothing. Damn the risk measures and earn, if that is what people want.

22 posted on 11/21/2008 5:43:25 AM PST by JasonC
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To: JasonC

Any thoughts on what option(s) is/are on the table at today’s emergency board meeting?


23 posted on 11/21/2008 6:13:56 AM PST by NVDave
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To: TigerLikesRooster

My broker team was with Smith Barney seven years til mid September, so about two years under Citi management. According to them, the question isn’t who buys Citi.

Citi demonstrably needs cash, and the only unencumbered asset worth much is Smith Barney, making the real question(s), “who wants Smith Barney, that can afford to buy Smith Barney?”


24 posted on 11/21/2008 6:21:58 AM PST by jeffers
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To: TigerLikesRooster; PAR35
Today is Friday...FDIC Friday.

I wonder who's gonna get roasted after close of business.

25 posted on 11/21/2008 10:14:19 AM PST by rabscuttle385 ("If this be treason, then make the most of it!" --Patrick Henry)
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To: TigerLikesRooster
Who is going to buy Citi?

GE

26 posted on 11/21/2008 10:17:08 AM PST by DTogo (I haven't left the GOP, the GOP left me.)
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To: ken21
‘xcuse me, but i can’t get over the irony that citi was angry at wells fargo for beating them out to buy wachovia.

Good point.

27 posted on 11/21/2008 10:18:28 AM PST by GOPJ (Murder rate per 100,000 residents in counties won by: Democrats: 13.2 Republicans: 2.1 -Olson)
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To: TigerLikesRooster; Zuben Elgenubi; All
http://www.save-a-patriot.org/files/view/whofed.html

CITI Bank use to be National City Bank of New York

Looks like Lehman Brothers had a substantial portion of their shares and that of the Fed Reserve.

28 posted on 11/21/2008 10:40:46 AM PST by wolfcreek (I see miles and miles of Texas....let's keep it that way.)
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To: wolfcreek

Sandy Weill pushing out John Reid was a big mistake. Ditto with Jamie Dimon. Robert Rubin has made $20 million and year as co-chairman since Clintoon left office and we will keep hearing how smart he is. Watch Obama make him treasury secretary again.


29 posted on 11/21/2008 10:56:40 AM PST by Frantzie
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To: wolfcreek

Sandy Weill pushing out John Reid was a big mistake. Ditto with Jamie Dimon. Robert Rubin has made $20 million and year as co-chairman since Clintoon left office and we will keep hearing how smart he is. Watch Obama make him treasury secretary again.


30 posted on 11/21/2008 10:56:53 AM PST by Frantzie
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To: TigerLikesRooster

Is there any movement on doing something about “mark-to-market” that contributes a lot to this mess and creates a higher volatility?


31 posted on 11/21/2008 11:05:09 AM PST by gsan
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To: TigerLikesRooster

Somali Pirates in Discussions to Acquire Citigroup
2008-11-20 14:23:00.260 GMT By Andreas Hippin November 20 (Bloomberg)

The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.

The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned most recently from hijacking numerous ships, including most recently a $200 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said. “You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything,” said Ali.

The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBS’s are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. Moody’s and S&P have already issued their top investment grade ratings for the PRBS’s.

Head pirate, Ubu Kalid Shandu, said “we need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets has allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster.”

Shandu added, “We don’t call ourselves pirates. We are coastguards and this will just allow us to guard our coasts better.”

(Got this email at the start of trading today. Must I tag it as satire so as not to start a run on PRBS?)


32 posted on 11/21/2008 11:15:49 AM PST by shoptalk
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To: MEpajamaMONSTER; ken21
Wells Fargo won the bidding war for Wachovia against Citigroup. Wachovia+Citigroup Google Search
33 posted on 11/21/2008 11:34:11 AM PST by NautiNurse (Palin won more votes in her Wasilla Mayoral race than Biden got in his 2008 Pres run)
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Comment #34 Removed by Moderator

To: TigerLikesRooster

“Who is going to buy Citi? “

With the stock price below $4 per share, we can probably run a bake sale here at FR and buy controlling interest :)


35 posted on 11/22/2008 4:24:44 AM PST by Constitutional Patriot (Socialism is the cancer of humanity.)
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To: JasonC

and how about the stock holders, f-em? some have alot of shares. and by the way, Smith Barney. Been spending a lot of money to lure brokers (MIllions) from the likes of Morgan Stanley. Who’s money? Our’s? Lots of questions to be asked.


36 posted on 11/23/2008 5:37:22 PM PST by reefdiver (How do you keep the Conservative a Conservative, in Washington DC ?)
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To: reefdiver
It is either possible to profitable be a banker by owning common stock in banks, or there is no capital in existence.

Make up your bloody mind now. Wanting to murder bankers because they supposedly deserve it when their customers stiff them, means communism and the evaporation of private capital, or the completely absence of all services from capital. If you want services of capital, they need to be paid for, in full, and that means it must be possible for a private banker to make money owning bank stock.

If you continue insisting that the common is always slaughtered, the stock market goes straight to zero without pause.

Be clear about that, and decide now.

37 posted on 11/23/2008 10:00:24 PM PST by JasonC
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To: TigerLikesRooster

At around 12:00am FOX-News just announced that the Feds would be bailing them out.
http://www.foxbusiness.com/story/markets/report-citigroup-rescue-talks/


38 posted on 11/23/2008 10:05:05 PM PST by Captain Beyond (The Hammer of the gods! (Just a cool line from a Led Zep song))
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To: TigerLikesRooster
their insistence that the New York company has ample capital, funding and strategic direction

Didn't I heard this from someone last week and the week before and the week before...

39 posted on 11/24/2008 8:40:40 PM PST by razorback-bert (Save the planet...it is the only known one with beer!)
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