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Wells Fargo to acquire Wachovia after Citigroup ends negotiations; Citi to pursue damages
By Angela McDaniels
Tacoma, Wash., Oct. 9 - Wells Fargo & Co. said it will go ahead with its plan to acquire all of Wachovia Corp. after Citigroup Inc. said it was pulling out of the talks after being unable to reach an agreement on splitting Wachovia.
As previously reported, Wells Fargo announced that it will acquire all of Wachovia mere days after Citigroup agreed in principle to acquire Wachovia's banking operations.
"The dramatic differences in the parties' transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement," Citigroup said in a news release on Thursday.
The company remains willing to complete its transaction with Wachovia, according to the release.
Meanwhile, Citigroup believes it has strong legal claims against Wachovia and Wells Fargo for breach of contract and for tortious interference with contract and plans to "vigorously" pursue these damage claims.
Citigroup said it will not, however, ask that the Wells Fargo-Wachovia merger be enjoined.
Wells Fargo said it has submitted its application to the Federal Reserve Board seeking expedited approval of the previous merger and share exchange agreement.
Under the share exchange agreement, Wachovia is issuing Wells Fargo preferred stock that votes as a single class with Wachovia's common stock representing 39.9% of Wachovia's voting power.
The acquisition of the non-banking related operations of Wachovia and the share exchange agreement have received early termination from the Federal Trade Commission under the Hart-Scott-Rodino Act.
Wells Fargo hopes to complete the transaction by the end of the fourth quarter.
Citigroup and Wells Fargo are financial services companies based in New York and San Francisco, respectively. Wachovia is a financial holding company based in Charlotte, N.C.
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