UPDATE: Wachovia Merger, No Gov’t Assistance Neededby Tim Manni
According to MarketWatch, Citigroup plans on filing a suit in opposition to Wachovia’s newly announced merger with Wells Fargo:
“Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement,” Citi said in a statement. Citigroup demanded that Wachovia and Wells Fargo abandon a $15 billion stock swap deal that was announced earlier in the day. Citi said it “has substantial legal rights regarding Wachovia and this transaction.”
It took four days for Wachovia to find a better deal than the one proposed Monday by Citigroup. Wachovia has announced it will be merged into Wells Fargo for $15.1 billion. The good news here is that this deal will require no government assistance as would the deal if Citi had acquired Wachovia. This is an encouraging sign that faltering financial institutions can be properly dealt with without the government’s use of taxpayer money:
Wells Fargo & Company (NYSE:WFC) and Wachovia Corporation (NYSE:WB) said today they have signed a definitive agreement for the merger of the two companies including all of Wachovia’s banking operations in a whole company transaction requiring no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Under the agreement, Wells Fargo will acquire all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. In the transaction, Wells Fargo will acquire all of Wachovia Corporation and all its businesses and obligations, including its preferred equity and indebtedness, and all its banking deposits.
We can probably expect to see more mergers ahead, even if they’re not on this scale.