Citigroup and Wells Fargo are fighting over Wachovia:
The financial giant Citigroup finally filed its complaint on Monday against Wachovia and Wells Fargo, laying out the claims underlying its efforts over the weekend to block the merger of the two financial companies.
In the complaint, filed in New York Supreme Court, Citigroup seeks a total of $60 billion in damages from the two companies and their directors, who are also named as defendants.
The filing came as the head of the Federal Deposit Insurance Corporation, which helped to broker the Citigroup-Wachova deal, said that she expected a resolution soon.
“I think we will have one today” that is in accord with the public interest, the F.D.I.C. chairman, Sheila Bair, said at a conference in Washington, according to The Associated Press. She did not elaborate.
In a sense, the Citigroup complaint is a formality because legal skirmishing has raged all weekend. Citigroup obtained an order from a New York State judge on Saturday evening that could have blocked the progress of the merger of Wachovia and Wells Fargo; that order was overruled on Sunday night by a New York appellate judge.
Wachovia and Wells Fargo started a counterattack, persuading a federal judge on Sunday to schedule a hearing on Tuesday morning to weigh whether Citigroup’s effort to buy assets of Wachovia was precluded by provisions in the financial bailout legislation signed by President Bush on Friday.
The root of the conflict is the interruption of Citigroup’s plan, announced a week ago, to buy Wachovia’s banking operations for $2.2 billion, or $1 a share. That deal was brokered by the Federal Deposit Insurance Corporation, whose officials worried that Wachovia could collapse. Regulators agreed to pick up losses over $42 billion incurred by Citigroup after the transaction.
The interruption came late Thursday in the form of counteroffer from Wells Fargo totaling seven times as much money for all of Wachovia and without potential taxpayer exposure. Citigroup cried foul, citing a letter agreement it had signed with Wachovia pledging to negotiate definitive agreements for the acquisition. The weekend’s war followed.
Obviously, Wachovia must be worth something to generate this much heat, right ?
