Wachovia Corp will pursue a deal to sell itself to banking rival Wells Fargo & Co. despite an attempt by Citigroup Inc to block the deal, with a showdown in court set for tomorrow.
Citigroup, the largest US bank, is also courting hobbled Wachovia and won a court order Saturday night blocking Wells Fargo from buying Wachovia until the court ruled.
A set of court proceedings yesterday resulted in a hearing scheduled tomorrow
to determine if an exclusive agreement between Citigroup and Wachovia to complete their deal prevents Wachovia from moving ahead with Wells Fargo.
Citigroup and Wells Fargo are battling for the sixth-largest US bank, which has suffered losses in the credit crisis but has a large and desirable network of bank branches.
The Charlotte-based target is the latest casualty of a crisis that has led to shotgun sales of Bear Stearns Cos and Merrill Lynch, the near collapse of American International Group, and the bankruptcies of Lehman Brothers Holdings and Washington Mutual.
Citigroup reached an agreement to buy Wachovia's banking assets for $2.2 billion in a deal backed by the US government last Monday.
But a surprise $15 billion bid on Friday by Wells Fargo - the seventh-largest US bank by assets that has managed to remain consistently profitable during the credit crunch - to buy the entire company without the government's help thwarted the Citi deal.
Wachovia said its agreement with Wells Fargo is valid and proper, and is best for shareholders, employees and US taxpayers. Wells Fargo said in a statement it has a binding merger agreement with Wachovia, and its deal, which keeps Wachovia intact, is better for all of Wachovia's stakeholders.
"We are confident that we will complete our announced merger with Wachovia. Nothing in the court's temporary order impacts our ability to ultimately do that," Wells Fargo said.
Meanwhile, the Wall Street Journal, citing people familiar with the matter, said Citigroup offered last week to significantly boost the price it was paying to buy most of Wachovia, and the proposal remains on the table.
The Journal said the exact terms and structure of Citigroup's sweetened bid for Wachovia were not clear. A spokesman for Citigroup declined to comment on the report.
Citigroup's US government-backed agreement to buy Wachovia's banking operations was done in such haste that it did not include a signed merger agreement.
Reuters