Wachovia Tumult: Citi Blasts Wells Fargo-Wachovia Deal

Citigroup Inc. today came out firing after Wells Fargo & Co. swooped in to ink a takeover deal with Wachovia Inc. after Citi came to an “agreement in principle” to acquire the Charlotte, N.C., bank. Citi accused Wells of “tortious interference.”

Here is Citi’s statement:

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. The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party. The Exclusivity Agreement also provides that the parties would be irreparably harmed by any breach of the agreement and that the remedy of specific performance of the agreement is appropriate.

Citi was negotiating in good faith and nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction that was announced on Monday. The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia’s closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday’s announcement.

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.

The Federal Reserve, meanwhile, is remaining noncommittal, saying in a statement that “We have not yet reviewed the new Wells Fargo proposal and the issues that it raises. The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability.” The Fed added that “The Citigroup proposal has undergone extensive review by the Federal Reserve and the Office of the Comptroller of the Currency.”