Citibank Inc. isn't taking Wells Fargo & Co.'s attempt to acquire Wachovia Corp. out from under its nose lying down. Raising the threat of lawsuits, the New York banking giant released a statement demanding that Wells Fargo and Wachovia immediately terminate their merger agreement.
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A Citigroup statement said that the transaction "is in clear breach of
an exclusivity agreement between Citi and Wachovia. In addition, Wells
Fargo's conduct constitutes tortious interference with the Exclusivity
Agreement."
Citi claims that its agreement with Wachovia to buy its banking assets,
signed Monday, bars Wachovia from participating in any discussions
or negotiations with any third party and from entering into any
transaction with any party other than Citi.
With egg on its face and its stock falling on the news, Citigroup is
unlikely to allow Wells Fargo to elope with Wachovia. However, it may
have a hard time justifying its $1 a share or $2 billion fire-sale purchase of only
the banking assets with the government taking on some of the risk, when
compared with Wells Fargo's $15.1 billion offer with no federal
assistance.
A lose of Wachovia to Wells Fargo would be a massive blow to Citigroup, once the largest bank in the U.S. However, its No. 1 position has eroded over the years as Bank of America Corp. took the mantle through a series of acquisitions. Additionally, J.P. Morgan Chase & Co.'s agreement to take over Washington Mutual Inc. would put Citi further behind its rivals. Wachovia's branch network and deposits would vault Citi back to the top, so expect it to fight tooth and nail for Wachovia. - George White
See Citigroup statement
See Dealscape post on Wells Fargo
See Dealscape post on Citigroup deal
