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Rating:Fight For Wachovia Heats Up: Citi Says Judge Order Blocks Wells Fargo Deal Not Rated 0.0 Email Routing List Email & Route  Print Print
Sunday, October 05, 2008

Fight For Wachovia Heats Up: Citi Says Judge Order Blocks Wells Fargo Deal

News summary by MFWire's editors

Citigroup said late Saturday it was granted emergency injunctive relief by a New York judge, extending the exclusivity agreement between Citi and Wachovia Corp. under further order of the court. See the full press release issued by Citi Saturday night below.

The exclusivity agreement prevents Wachovia from negotiating or entering into a merger/acquisition agreement with other firms.

According to the order, Citi and Wachovia will appear before Judge Charles Ramos of the Supreme Court of the State of New York on Friday.

Representatives from the banks gathered at Judge Ramos' Connecticut home Saturday afternoon for more than three hours of oral arguments, The New York Times reports. Citi handed the judge a 16-page complaint naming Wells Fargo, Wachovia and their boards as defendants. Citi, which has yet to lodge the complaint formally as the courts were closed, is said to be seeking $60 billion in damages from Wells Fargo for interfering in the initial transaction.

Wachovia spokeswoman Christy Phillips-Brown told The Times that the Charlotte bank "believes its agreement with Wells is proper, valid, and is in the best interest of shareholders, employees and American taxpayers."

"Under that agreement, Citigroup is always free to make a superior offer to Wachovia," she said.

Wells Fargo spokesman Lawrence Haeg said Wells has a "definitive merger agreement with Wachovia Corporation and it is a compelling value for, and in the best interests of, Wachovia's shareholders, team members, customers, communities and the American taxpayers."

On September 29, Citi announced it was purchasing Wachovia's banking operations for $2.2 billion, a transaction brokered by the Federal Deposit Insurance Corp. Four days later, Wells Fargo unveiled plans to buy all of Wachovia for $15 billion.

Below is the press release issued by Citi Saturday night:




New York Citi tonight was granted emergency injunctive relief extending the Exclusivity Agreement between Citi and Wachovia Corp. (NYSE: WB) until further order of the court. This relief was granted over the objection of Wachovia. Justice Charles Ramos of the Supreme Court of the State of New York issued the order.

Citi is prepared to continue negotiations with Wachovia on the parties' previously agreed-to transaction.

As indicated by Citi in court filings, the Exclusivity Agreement, while in effect, unconditionally bars Wachovia from negotiating or entering into a merger/acquisition agreement with any party other than Citi.

Under the Judicial Order, Citi and Wachovia must appear before Judge Ramos on Friday, October 10, 2008. Citi has made clear it is prepared to resume negotiating in good faith to complete the transaction contemplated by the agreement-in-principle that Citi and Wachovia announced on Monday, September 29, 2008.

On September 29th, Citi and Wachovia both announced an agreement-in-principle for Citi to acquire all of the banking subsidiaries of Wachovia. At the time the Wachovia/Wells Fargo transaction was announced, Citi was finalizing the agreements required to consummate its FDIC-assisted open bank transaction with Wachovia. Citi has been providing liquidity support to Wachovia since the day of the announcement.

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.
 

Edited by: Armie Margaret Lee


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