Wells Fargo has struck a deal to buy all of Wachovia for US$15.1 billion, topping an offer by Citigroup to buy just Wachovia’s banking operations.
Wells Fargo says the transaction does not require financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
On Monday, Citigroup announced it would buy Wachovia’s banking operations for about $2.2 billion with assistance from the FDIC. It was not interested in Wachovia’s brokerage operations, A.G. Edwards, or asset-management arm, Evergreen Investments.
“This agreement represents a compelling value for Wachovia shareholders,” says Wells Fargo chairman Dick Kovacevich. “It provides superior value compared to the previous offer to acquire only the banking operations of the company and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world’s great financial services companies.
Citigroup says Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia. In addition, Wells Fargo’s conduct constitutes tortious interference with the exclusivity agreement.
“Citi has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the exclusivity agreement,” says a statement. “Citi has substantial legal rights regarding Wachovia and this transaction.”
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