Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Wachovia Suitors Try to Make Nice

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

While the tug-of-war between Citigroup (NYSE: C  ) and Wells Fargo (NYSE: WFC  ) over Wachovia (NYSE: WB  ) isn't over just yet, the two have agreed to stop suing the pants off of each other -- at least until noon Wednesday -- so something can get hammered out before Wachovia croaks.

Did you miss the past few episodes of Days of our Banking Lives? Here's a recap: 

After Citigroup's $1-per-share bid for Wachovia's banking assets (backstopped by the government) was crushed by Wells Fargo's $7-per-share offer for all of Wachovia (with no backstop), Citigroup successfully pushed to have a court halt Wells Fargo's bid. Wells Fargo had that ruling overturned Sunday.

That's when things got really out of hand. Citigroup -- apparently trying to exploit people's fascination with large numbers after the $700 billion bailout -- tried to sue both Wells Fargo and Wachovia for upward of $60 billion -- yep, with a "b." The suit sought more than $20 billion in compensatory damages and more than $40 billion in punitive damages.

You're right, it's completely absurd. Citigroup offered to buy Wachovia for a little over $2 billion, yet it felt it deserved 30 times that amount after Wells Fargo had the nerve to offer to pay shareholders what they deserved and also let taxpayers off the hook. What's ironic about the whole thing is that if Citigroup truly feels it's out tens of billions of dollars, it's clearly admitting that the $2 billion it offered was a pittance of what the company is actually worth to shareholders.

Thank goodness, the two have agreed to halt the sue-fest and can use the 48-hour truce to try to settle on a deal for Wachovia. Will it work? My guess is that Citigroup can't afford to compete with Wells Fargo's bid, so legal technicalities are about all it can rely on. Things should stay interesting over at least the next day or two.

No matter what happens, Wachovia is the real winner here. While the past year has been headlined with last-minute bargain bids and bailouts, Wachovia has the pleasure of being fought over, which should leave shareholders in a much better spot than the fire-sale tactics we're become so used to.

Related Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2008, at 11:15 PM, Nyslee wrote:

    To the point and spot on.

    It has become apparent, with proof, that the F.D.I.C. approached Bob Steel and encouraged the Wachovia board to take the Wells Fargo bid.

    The shareholders and U.S. taxpayers win with Wells Fargo.

    The exclusive agreement to negotiate a non-binding term sheet is a non-starter as matter of law...the new law enacted on Friday last.

    The U.S. Court will allow the Wells bid to proceed.

    Citigroup was not given good, or accurate legal advice and should not have assumed they were the only game in town.

    Capitalism and the law supports Wells Fargo in toto.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 747000, ~/Articles/ArticleHandler.aspx, 10/26/2016 10:58:50 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 hour ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:01 PM
C $50.01 Up +0.42 +0.85%
Citigroup CAPS Rating: ***
WB.DL2 $5.54 Down +0.00 +0.00%
Wachovia Corp CAPS Rating: **
WFC $46.15 Up +0.43 +0.94%
Wells Fargo CAPS Rating: ****