Jilted Citigroup (C) scores a victory in its effort to stop bride Wachovia (WB) from running off with a healthier man. A judge has granted Citi an emergency injunction that extends the Exclusivity Agreement between Citi and Wachovia–the one Wachovia blatantly violated–until October 10.
Importantly, this does NOT mean that Wachovia must merge with Citi. It just means that Wachovia can’t negotiate with anyone but Citi for another five days. Given that Wachovia appears to be taking the position that it didn’t “negotiate” with Wells Fargo while under the original Citi Exclusivity Agreement, it remains to be see whether Wachovia will care.
What does seem likely is that Citi will now raise its offer for Wachovia. Even with the injunction, the Exclusivity Agreement will run out at the end of this week, and at that point Wachovia will be free to take the Wells Fargo offer.
Wachovia will be taking some risk in waiting, though. Who knows what will happen this week. If the bottom falls out of the market, it’s possible Wells could cut or withdraw its offer, leaving Citi the only bidder. And an infuriated one at that.
That said, Wachovia appears to be playing this brilliantly: If it had just stalled the Citi negotiations until the Exclusivity Agreement ran out, it would have lost negotiating leverage with Wells. Now, Citi is forced to gamble that the courts will somehow block the Wells deal…or raise its bid.
Citi is said to be seeking a modest $60 billion in damages.