Citi to Wachovia: See You in Court (Maybe)
Citigroup is threatening to sue Wachovia Corp. after it spurned a federally backed deal to sell itself to Citibank, choosing instead this morning to sell itself to Wells Fargo & Co. in a $15.4 billion takeover.
Citigroup may sue both banks, and is also considering sweetening its bid for Wachovia, an anonymous source tells the Wall Street Journal. The source—who sounds an awful lot like a lawyer—said Citigroup is mulling “suing Wachovia for breach of the exclusivity pact and suing Wells Fargo for tortuous interference,” the paper reports.
In a written statement, Citigroup demanded “that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the exclusivity agreement. Citi has substantial legal rights regarding Wachovia and this transaction.”
FDIC Chair Sheila Bair said in a written statement, “The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest.”
The board of governors of the Federal Reserve was noncommittal on the turn of events, saying “we have not yet reviewed the new Wells Fargo proposal and the issues that it raises.”
In a conference call with reporters, the Journal reports Wachovia CEO Robert Steel said “in a chilly voice, ‘the controversy on this issue will be addressed in the appropriate way,’ and [refused] to comment on whether Wachovia had a binding agreement with Citigroup,” as Citigroup claims.
