Wells Fargo & Co. has won the battle for Wachovia Corp.
Citigroup Inc. has withdrawn from negotiations brokered by federal regulators that sought a compromise to the competing bids from Wells and Citigroup. Wachovia’s brokerage business is in St. Louis and employs 4,800 people.
The issue is likely to go to court. But New York-based Citigroup (NYSE:C) says it will no longer seek to block Wells’ proposed $15.1 billion purchase of Wachovia.
Wells Fargo Chairman Dick Kovacevich welcomed the announcement and said Wells would go ahead with the proposed, all-stock purchase of Wachovia. He said he was pleased that Citigroup will not seek to stop the merger.
“We believe that is the correct and right decision for our country and our citizens and the health of our already stressed financial system, as well as our and Wachovia’s respective shareholders and stakeholders,” Kovacevich said in a prepared statement.
He did not address the pending action for damages. But he did address, at least indirectly, press reports Thursday indicating that Wells and Citigroup had both found more problems in Wachovia’s mortgage portfolio than expected.
“Credit teams at Wells Fargo have had an opportunity to work with their counterparts at Wachovia,” Kovacevich said. “Given our broad-based operating expertise, and specific understanding of these individual businesses we believe we have adequately evaluated the risks inherent in the portfolios as of the time of this merger agreement.”
The combined company will have $1.42 trillion in assets, $787 billion in deposits, 48 million customers, $258 billion assets under management in mutual funds, 10,761 stores, 12,227 ATMs and 280,000 employees.
Citigroup still plans to seek damages for Wachovia’s decision to choose San Francisco-based Wells (NYSE: WFC) over an earlier agreement it had made to sell its banking operations to Citigroup for $2.1 billion.
“We did not seek the Wachovia transaction; Wachovia brought it to us,” Citigroup Chief Executive Vikram Pandit says in a prepared statement. “Our focus remains on capitalizing on our global strengths. We will continue to apply the same discipline we employed in this and other recent transactions to future acquisition opportunities.”
In a statement Thursday evening, Charlotte, N.C.-based Wachovia (NYSE:WB) said: “We look forward to completing our merger with Wells Fargo, which we have always believed is in the best interest of shareholders, employees, creditors and retirees as well as the American taxpayers, and it imposes no risk to the FDIC fund. Our board made the right fiduciary decision for all of our constituents, and we look forward to consummating our merger with Wells Fargo.”
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