Citigroup has walked away from its attempted purchase of Wachovia, handing victory to Wells Fargo in a struggle for the nation's sixth-biggest bank.
Citigroup had offered two weeks ago to buy Wachovia's for $US2.2 billion ($3.3 billion) in a government-assisted transaction. That bid was trumped last week by Wells Fargo's $US15 billion offer for the entire company. The two spent this week negotiating a possible split of the assets.
"Wells Fargo just won, lock stock and barrel,'' said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "I guarantee this is a done deal now.''
Wells Fargo gains control of a bank with $US448 billion of deposits in 21 states. The agreement values Wachovia at $US7 a share and includes the entire company, without any aid from the US government.
Citigroup's bid worked out to about $US1 share, left out the securities brokerage and Evergreen mutual-fund units and was tied to help from the Federal Deposit Insurance Corp.
Wells Fargo and Wachovia reiterated the terms of their agreed takeover in regulatory filings today.
"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 yesterday.
Wells Fargo spokeswoman Melissa Murray and Wachovia's Christy Phllips Brown declined to comment on Citigroup's announcement.
While Citigroup said it is ending court efforts to block the merger of Wachovia and Wells Fargo, it vowed to press its claim for breach of contract damages.
"Citi believes that it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisors and others for breach of contract and for tortious interference with contract,'' the bank said.
"Citigroup plans to pursue these damage claims vigorously on behalf of its shareholders. However, Citigroup has decided not to ask that the Wells Fargo-Wachovia merger be enjoined.''
