Citigroup, Wells Fargo fight for Wachovia

After Wells Fargo announced last week that it was set to buy Wachovia for $15.1 billion, Citigroup has now objected, demanding that it be called off, saying the new deal has breached its exclusive acquisition rights. ┬á The Wells Fargo deal had trumped an earlier government-backed rescue deal that Citigroup had proposed, in which it would buy WachoviaÔÇÖs banking operations for $2.2 billion. ┬á Wells offered to buy all of Wachovia for more money without government aid, to which Wachovia had decided not to honor its prior agreement with Citigroup. ┬á The two financial companies spent the weekend in court, discussing with US regulators a possible split in WachoviaÔÇÖs assets. Officials from the Federal Reserve and Treasury talked of Citigroup acquiring WachoviaÔÇÖs branches in the northeast and mid-Atlantic regions while Wells Fargo would take branches in the southeast and California, as well as its asset-management and brokerage units.┬á A US judge was hesitant to rule that the Wells Fargo deal was in fact valid, saying it ÔÇ£appearsÔÇØ the law allows Wachovia to consider offers other than a previous one from Citigroup.┬á The $700 billion bailout bill for the banking industry includes language that permits Wells Fargo to top the $2 million Citigroup offer, David Boies, a Wachovia lawyer, told District Judge John Koeltl at an emergency hearing on Sunday. ┬á Koeltl said Wells Fargo may be correct, adding that the judge who is permanently assigned to the case may come to a different conclusion.┬á ÔÇ£We are pleased that the unfounded order entered yesterday has been vacated,ÔÇØ Wells Fargo said in a statement. ÔÇ£Wells Fargo will continue working toward the completion of its firm, binding merger agreement with Wachovia.ÔÇØ┬á Wachovia CEO Robert Steel said in a statement that the company plans to continue its negotiations with Wells Fargo. ┬á A hearing is scheduled for Oct. 7, at which time it may determined whether the offer may proceed.