There is more acquired position. Citigroup will be no more than three days for the acquisition of the fourth American Bank, Wachovia. California-based Wells Fargo, which Warren Buffett is the main shareholder, has put a lot more money on the table Friday, offering $ 15.1 billion, and won the part. Citi retaliated immediately getting late in the night of Saturday the injunction of a judge of the Supreme Court of New York which blocks the transaction with Wells Fargo until a hearing scheduled Friday.
Citi and Wachovia had ratified a letter of intent for two pages and should sign last Friday the final contract. They were, moreover, by an exclusive bargaining agreement, which was extended by judge beyond October 6. "Any agreement between Wachovia and Wells Fargo is illegal, had immediately declared Friday Vikram Pandit, CEO of Citi.". We continue to defend the interests and rights of Citigroup and wish to complete this operation. "In the latter case, prevented by a call from the CEO of Wachovia, Robert Steel, Friday to two hours of the morning, according to the Wall Street Journal, had the weekend to evaluate its strategy. Wells Fargo yesterday assured that the interim measures made on the night of Saturday by American justice prevented him nothing to complete its merger with Wachovia. If the legal channels will be explored, Citi may also decide to bid. Last March, JPMorgan Chase had well to raise its offer on Bear Stearns for $ 2 to $ 10 action. The Federal Deposit Insurance Corporation (FDIC) has estimated that, as long as the offer of Wells Fargo review was not completed, Citigroup remained in the race. Vikram Pandit had managed to negotiate an operation to its advantage by buying the bulk of the activities of Wachovia for $ 2.16 billion and taking in its record a maximum of 42 billion of losses, the rest being treated by the FDIC.
Politically clever
The operation allowed him to become the first Bank of deposits American and to raise 10 billion of capital. But Wells Fargo, also on the ranks because it wants to expand its national coverage, returned to Office Friday by proposing a more advantageous solution for the shareholders and which does not cost a penny to the State. After the vote on the Stabilization Act, which committed the taxpayers $ 700 billion to come to the rescue of the financial system, the manoeuvre was politically competent. Wells Fargo also hopes to benefit from a point of the new law which stipulates that contracts for acquisitions between the FDIC will not necessarily apply. Despite the legal risks, Wachovia and preferred the new option because it best serves its shareholders.
Citi, which has more than 61 billion in toxic assets and who already suffered more than 50 billion, in losses and write-downs of assets had hoped to increase its customer base and stabilize its balance sheet through the provision of Wachovia deposits. Abandoned by his fiancée, the group appears as a giant with feet of clay. Its title has lost 18 on the stock market Friday.
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