We weren’t the only ones surprised by today’s Wachovia-Wells Fargo deal, Citigroup was, too–and not in a good way. Wachovia’s Wells Fargo deal wipes out Citi’s transaction and Citi wants its bank back.
The agreement Citi reached with Wachovia on Monday prohibited Wachovia from pursuing a deal with another firm, and Citi is now demanding Wachovia terminate its plans to merge with Wells Fargo.
The WSJ has Citi’s official statement: The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party. The Exclusivity Agreement also provides that the parties would be irreparably harmed by any breach of the agreement and that the remedy of specific performance of the agreement is appropriate.
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 value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia’s closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday’s announcement.
Citi has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the Exclusivity Agreement. Citi has substantial legal rights regarding Wachovia and this transaction.
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