Citi? No. Wells to Buy Wachovia

[don]

In a surprise twist, the West Coast bank Wells Fargo & Company, said Friday that it had reached an agreement to acquire a rival, the Wachovia Corporation, for about $15.1 billion in stock.


The announcement came just four days after Citigroup had agreed to buy Wachovia’s banking operations of Wachovia for $2.2 billion of about $1 a share. But Wachovia, which is based in Charlotte, N.C., has now rejected that deal in favor of one where the entire company would be acquired. How Citigroup will respond to the news remained a question Friday morning.
In a statement, Wells Fargo, which is based in San Francisco, said that the deal required no assistance from the Federal Deposit Insurance Corporation or any other government agency.



The bank plans to raise up to $20 billion by issuing shares, primarily common stock.


http://www.nytimes.com/2008/10/04/bu...04bank.html?hp

[we_are_toast]

Re: Citi? No. Wells to Buy Wachovia

So Citi is not one of the chosen survivors? Looks like the to big to fail plan didn't work.

[c1ue]

Re: Citi? No. Wells to Buy Wachovia

Jury is still out on Citi for me.

My feeling is that this is more a FDIC having overcommitted with WaMu.

At some point there was going to be a challenge of the FDIC's right to guarantee massive sums of potentially bad debt.

What has not been spoken is that the FDIC guarantee on WaMu's non-JPM assets and liabilities could very easily exceed its remaining cash pool, and furthermore that said guarantee is open ended and unpredictable.

Adding another - Wachovia - would have made this even worse.

What is interesting is that Wells did not ask for any guarantees.

This means either Wells truly believes the real estate MBS/CDO assets are indeed undervalued, and that Wells can survive the temporary markdown.

That, or the bailout is guaranteed and there is no reason for Wells to have to worry about getting undercapitalized.

I suspect it is the latter.

[don]

Re: Citi? No. Wells to Buy Wachovia

Wachovia was holding back portions of its wholesale operations in the Citi deal. The Wess offer is reportedly for the entire enchilada.

[don]

Re: Citi? No. Wells to Buy Wachovia

2008-10-03 — bloomberg.com

Citigroup Inc. demanded that Wells Fargo & Co. and Wachovia Corp. terminate a $15.1 billion takeover agreement announced today, saying it breached an exclusive deal the New York-based company reached earlier this week.
...
``Citi has substantial legal rights regarding Wachovia and this transaction,'' the New York-based company said in a statement. ``Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia.''


Great! I now have substantial cash (short term CDs) in a bank that apparently no longer exists, going to litigation between two buying entities. Does this add me to the 'run-on-the-banks crowd?

[GRG55]

Re: Citi? No. Wells to Buy Wachovia

So Citi is not one of the chosen survivors? Looks like the to big to fail plan didn't work.

Looks to me like it's alive and well. Wells probably felt it wasn't "too big to fail" and moved to fix that little problem.

If they are correct and California real estate is at, or near, a bottom [talk about "first mover advantage :rolleyes:] then they have scooped up the Golden State porfolio embedded in Wachovia on the cheap.

If they are wrong and the whole thing blows up, this merger will undoubtedly make them "too big to fail"

Me cynical? Nah...:p

[rj1]

Re: Citi? No. Wells to Buy Wachovia

As a Wachovia customer, I'd rather Wells Fargo get it personally.

Also, Wells Fargo didn't require the government for their buyout plan, so as a libertarian I'd rather they get it.

Apparently there was some new IRS rule that came out Tuesday that aids Wells Fargo here.

[rj1]

Re: Citi? No. Wells to Buy Wachovia

Here is Citi's talking points:

http://www.cnbc.com/id/15840232?video=876952133&play=1

[Nervous Drake]

Re: Citi? No. Wells to Buy Wachovia

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