Just days after Citigroup CEO Vikram Pandit was gloating about picking up the banking business of Wachovia Corporation with the blessings and support of the U.S. government, Wells Fargo seems to have snatched the prize away.
The Wachovia board has approved Wells Fargo’s offer of $15.1 billion ($7 per Wachovia share), which does not require government support unlike the Citigroup deal.
We can understand Pandit’s anger. After all, he was going to get Wachovia’s banking business on the cheap with Citigroup paying just $2.16 billion.
Any surprise then that Vikram Pandit a.k.a. desi butcher is frothing at the mouth.
The Wells Fargo deal is a better deal for Wachovia shareholders and taxpayers and involves the purchase of the entire Wachovia Corporation (not just the banking operations) for $15.1 billion.
This is what Vikram Pandit had to say on September 29 (Monday):
The transaction is extremely attractive from a strategic perspective. It will deliver the combined capabilities of two powerful organizations to our customers and shareholders, providing meaningful EPS accretion and downside loss protection.
On October 3 (Friday), the mood had changed at Citi, which put out this statement hinting at a lawsuit:
Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement.
….Citi has 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.
We doubt Vikram Pandit can do much to stymie the Wells Fargo deal since it seems to be a better deal for Wachovia shareholders as well as for U.S. taxpayers.
Citigroup shares fell 18.44% to $18.35 on Friday.