October 10, 2008
Citigroup Withdraws Offer to Buy Wachovia Banking Operations
Here is a post by David Brown on Alston & Bird’s new “Financial Markets Crisis Blog“:
Last night, Citigroup announced that it had ended negotiations with Wells Fargo over Wachovia, citing “dramatic differences in the parties’ transaction structures and their views of the risks involved.” Citigroup states that it “remains willing” to complete its previously announced FDIC-assisted acquisition of Wachovia’s banking operations, but has “decided not to ask that the Wells Fargo-Wachovia merger be enjoined.” Citigroup stated that it intends to continue to pursue its lawsuit seeking $20 billion in compensatory damages and $40 billion of punitive damages, noting that “Without our willingness to engage in this transaction, hundreds of billions of dollars of value would have been seriously threatened. We stood by while others walked away. Now, our shareholders have been unjustly and illegally deprived of the opportunity the transaction created.”
Wachovia and Wells Fargo issued a joint press release stating that Wells Fargo had “reaffirmed” its commitment to acquire Wachovia and that it had filed its application to the Federal Reserve “seeking expedited approval of the merger and the share exchange agreement previously entered into between Wachovia and Wells Fargo.” Under the share exchange agreement, Wells Fargo would acquire shares of a new series of Wachovia preferred stock that votes as a single class with Wachovia’s common stock representing 39.9% of Wachovia’s total voting power.
Separately, the Federal Reserve issued a statement acknowledging the efforts of the parties to “reach an accord” and Citigroup’s decision not to seek an injunction.