Updated from Thursday, Oct. 9
Citi said on late Thursday that it was breaking off negotiations and proceeding with a lawsuit against Wachovia and Wells Fargo, which agreed to a deal last week, trumping an earlier deal between Wachovia and Citi.
Citi, however, said it would not seek to block the deal between Wachovia and Wells after failing to come to an agreement after days of negotiations. Citi cited "dramatic differences" in their views over the transaction structure and risks involved. The dueling banks had initially agreed to halt litigation related to the competing deals through 8 a.m. on Friday.Citi says it is still willing to go through with the deal it offered. However, the company is still seeking "compensatory and punitive damages for bad faith breach of contract and tortious interference" in the $60 billion lawsuit it filed Monday. Citi on Sept. 29 had agreed to take over Wachovia's banking operations for $2.16 billion, or about $1 per share, in a deal pushed forward by the Federal Deposit Insurance Corp. On Oct. 3, Wells trumped that plan with its own offer of $15.1 billion, or $7 per share, to acquire all of Wachovia. Wells' offer did not require FDIC assistance, while Citi's required the government to take on potential losses on part of Wachovia's loan portfolio Citi said that without its willingness to acquire Wachovia on Sept. 29, the bank would have failed. It noted Wells had "walked away" from a deal prior to the FDIC reaching out to Citi. Wachovia shares skyrocketed $1.10, or 30.6%, to $4.70 in recent trading. Citi shares were up 5.7% and Wells Fargo shares were down fractionally.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV