Judge Blocks Wells/Wachovia Deal

The battle over Wachovia(WB Quote) is getting hotter.

A New York judge has temporarily blocked Wells Fargo's(WFC Quote) planned purchase of the Charlotte, N.C.-based bank.

Justice Charles Ramos of New York State's Supreme Court Saturday granted emergency injunctive relief extending an exclusivity agreement between Wachovia and Citigroup(C Quote), according to a press release from Citigroup.

On Monday, Citi announced it would acquire Wachovia's banking operations for $2.16 billion. Citi's deal needed the help of the Federal Deposit Insurance Corp., which had agreed to assume most of the risk of Wachovia's loan portfolio.

On Friday, however, San Francisco-based Wells appeared to snatch Wachovia from Citi's arms, by announcing it would purchase all of Wachovia in a stock-for-stock deal totaling $15.1 billion, or $7 a share. Wells' deal requires no federal assistance.

Some experts have wondered whether Citi should sweeten its bid, or just walk away from Wachovia.

New York-based Citi says it's prepared to continue negotations with Wachovia, which objected to the judge's order, according to the press release. "Citi remains willing to enter into an agreement with Wachovia which Citi believes would deliver powerful capabilities of the two entities to their respective stakeholders," the release says.

The judge has ordered Citi and Wachovia to appear before him on Friday, Oct. 10.

On Friday, shares of Wachovia jumped $2.30, or 58.8%, to $6.21 on news of the Wells deal. Citigroup stock slumped $4.15, or 18.4%, to $18.35, while Wells' shares shed 60 cents, or 1.7%, to close at $34.56.