Citi keeps Wachovia bid alive with a court order

CHARLOTTE: Citigroup said a New York state court judge granted an order extending the bank���s ���exclusivity agreement��� with Wachovia, after Wells Fargo announced a competing bid for the North Carolina lender Friday.

New York State supreme court Judge Charles Ramos issued the emergency injunction last night, protracting Citigroup���s agreement to negotiate the acquisition of parts of Wachovia ���until further order of the court,��� Citigroup said in an e-mailed statement. That accord was set to expire Monday. The two banks are required to appear before Ramos on October 10, according to the statement.

Hobbled by $61 billion of losses, Citigroup is in the midst of a takeover battle with Wells Fargo for control of Wachovia. A spokeswoman for Wells Fargo didn���t reply to requests for comment after Citigroup announced the court order.
���Wachovia believes its agreement with Wells Fargo is proper, valid and is in the best interest of shareholders, employees and the American taxpayers,��� said Christy Phillips Brown, a Wachovia spokeswoman. ���Under that agreement, Citigroup is always free to make a superior offer to Wachovia.���

Citigroup was seeking $60 billion in damages from Wells Fargo in connection with the proposed deal, the New York Times reported, citing a person briefed on the situation. Citigroup fell as much as 21% Friday in New York trading after Wells Fargo, the biggest US bank on the West Coast, agreed to buy all of Wachovia for $15.1 billion. The bid trumped Citigroup���s government-backed offer of $2.16 billion for Wachovia���s banking operations.

���The taxpayer doesn���t pay a penny��� for the Wells Fargo deal, Wells chairman Richard Kovacevich, 64, said Friday. His company���s bid is superior to Citigroup���s also because it���s a higher price and the combining banks ���share similar cultures and values.���

Vikram Pandit, Citigroup���s CEO, is counting on the Wachovia purchase to help rebuild after three quarters of losses totaling more than $17 billion. The banks market value has dropped 38% this year to about $100 billion, leaving it below Wells Fargo.

If Wells Fargo winds up with Wachovia, it would creep up on its New York rival with deposits of $787 billion, compared with Citigroup���s $826 billion. Pandit insisted Citigroup will prevail, citing the exclusive agreement signed by Wachovia. Kovacevich said during a conference call the deal with Wachovia is ���solid���.

Citigroup demanded Wells Fargo abandon the takeover. Buying Wachovia would give Citigroup the third-biggest US bank network and cement its status as the nation���s largest lender by assets. ���Any such agreement between Wachovia and Wells Fargo is illegal,��� Pandit said in the e-mail on Friday. ���We continue to vigorously pursue Citigroup���s interest and rights in completing this transaction.���

Citigroup may increase its offer, said a source. ���I���m still not convinced that Citigroup can force this sale to happen,��� said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans and a former M&A lawyer at Sullivan & Cromwell. ���Citigroup may be facing the chance to get themselves a small settlement, and that���s a nice shot in the arm for a company that���s struggling.���

The Federal Deposit Insurance Corp, helped broker Citigroup���s purchase when Wachovia���s health faltered. chairman Sheila Bair said until a review of Wells Fargo���s offer is completed, the agency will stand behind the Citigroup deal.