Citigroup abandons fight for Wachovia; will press lawsuit against Wells Fargo

10 October 2008

Citigroup has decided to drop its fight with Wells Fargo for the acquisition of Wachovia.

Wells Fargo will now be able to proceed with its $15-billion acquisition of the troubled competitor, making it one of the largest retail and commercial banks in the United States.

However, the Long Island-based Citigroup said it would continue to press a lawsuit seeking over $60 billion from Wells Fargo and Wachovia for striking a deal after Wachovia agreed to negotiate exclusively with Citigroup.

Citi obtained a stay on Saturday afternoon from the New York supreme court, restraining Wachovia from going ahead with the competing bid from Wells Fargo, which was overturned by a New York state appeals court last night as Wachovia obtained a restraining order preventing Citi from interfering with its deal to sell the entire company to Wells Fargo.

Citi had offered to acquire the banking business of Wachovia for $1 per share against the Wells Fargo offer of $7 per share for the whole enterprise (See: Citi to acquire Wachovia assets in a US government-backed rescue) 

At the end of September, Citigroup had sought to acquire most of Wachovia Corporation assets even as US lawmakers were preparing to vote on a $700 billion bail-out of failed banks in the US. Citigroup Inc was to pick up the banking operations of the Charlotte, North Carolina-based Wachovia Corporation, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC) with the concurrence of the board of governors of the Federal Reserve and the secretary of the treasury in consultation with the President.