Wachovia's Remnants Hard to Value

Wachovia (WB Quote) shares nearly doubled Tuesday as investors perhaps saw some value in the businesses left behind after Citigroup's (C Quote) acquisition of its banking operations.

Wachovia shares dropped 90% on Monday following news that the Federal Deposit Insurance Corp. brokered a hurried deal to sell the company's retail bank, corporate and investment bank and wealth management business to Citi for $2.16 billion. Wachovia will retain its Wachovia Securities, the nation's third-largest brokerage firm, and Evergreen Asset Management.

Analysts say Wachovia has so far offered little perspective on what would become of the rest of the company.

"The biggest question on investors' minds is what is the remaining value of that company -- what is it worth and what are the prospects of the remaining business operations," says Todd Hagerman, an analyst at Credit Suisse. "They just haven't given us a lot of detail. We don't have any sense of the capital structure."

Andrew Marquardt, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller, wrote in a note Tuesday morning that "[w]e found the disclosure on this deal to be one of the worst we can recall of a major transaction."

"With such little detail and no communication yet by Wachovia, we have made several assumptions across three different approaches to arrive at franchise value for remaining Wachovia shareholders of about $1.40 a share," but that could range widely from a negative $2.13 a share upward to $5.77 a share, according to the note.