Citigroup lets Wells Fargo grab Wachovia

October 10th, 2008 - 7:39 pm ICT by IANS  

New York, Oct 10 (IANS) Leading global financial services company, Citigroup, has abandoned its fight for Wachovia bank, letting it go to Wells Fargo, but said it will seek compensatory and punitive damages for bad faith and breach of contract.India born Vikram Pandit led Citigroup announced Thursday that it had reached no agreement with Wells Fargo following several days of discussions about matters related to Wachovia.

The impasse reflected dramatic differences in the two parties’ transaction structures and their views of the risks involved.

This clears the way for Wells Fargo to proceed with its $15 billion acquisition of the North Carolina based banking chain with a network of 3,346 branches in the US.

Wells Fargo was an early suitor but made the offer well after Citigroup’s $2.16 billion takeover bid early last week and being facilitated by the federal government, the offer was accepted by Wachovia.

Citigroup had also agreed to shoulder Wachovia’s potentially hundreds of billions of dollars in toxic loans.

Wachovia had also agreed on an exclusivity agreement with Citigroup, barring it from negotiating with another party.

Now Citigroup believes that it has strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisors and others for breach of contract and for tortuous interference with contract.

Citigroup plans to pursue these damage claims vigorously on behalf of its shareholders.

Pandit said: “We did not seek the Wachovia transaction; Wachovia brought it to us. Our focus remains on capitalising on our global strengths. We will continue to apply the same discipline we employed in this and other recent transactions to future acquisition opportunities.”

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