The FDIC statement did not specify a price on the transaction, but The New York Times reported the $1 per share figure.
Unlike last week's takeover and sale of Washington Mutual Inc., the FDIC
statement said that Wachovia did not fail, but that its banking assets
are "to be acquired by Citigroup Inc. on an open bank basis with
assistance from the FDIC."
Under the agreement, Citigroup will absorb the first $42 billion of
losses on $312 billion of a preidentified Wachovia pool of loans. Any
losses above the $42 billion will be taken on by the FDIC. In return
for the FDIC's taking on of the risk, the agency has received $12
billion in preferred stock and warrants from Citigroup.
The deal gives Citigroup the bulk of Wachovia's assets and
liabilities, including five depository institutions, as well as assumption of the bank's
senior and subordinated debt. Left out of the transaction were Wachovia
subsidiaries AG Edwards and Evergreen.
Shares of Wachovia plummeted 90% to 94 cents in premarket trading after the announcement of the acquisition. -
George White
See FDIC statement
Citigroup Inc. is acquiring the banking operations of Wachovia Corp. for $1 a share in a deal brokered by the Federal Deposit Insurance Corp., which gives the government agency $12 billion in preferred stock and warrants from the banking giant.
