Wells Fargo buys Wachovia (tax, financial, bank, lawsuit)

[Kootr]

Originally Posted by paperhouse

The FDIC isn't willing to back the new deal. They want Citi to own this so they can bail them out when it hits the fan.

Citi may be pissed-off, but the WFC deal does not involve the Fed and should be entirely up to the shareholders. The agreement with Citi was an agreement in principle, not an exclusive contract agreement the way I understand it.

[CTR36]

I think Wells Fargo sucks. I don't like that bank but if they are giving the shareholders a better deal, then I guess we'll deal with it. I bank with Wachovia and get free ATM usage anywhere, they rebate me the non-Wachovia atm fees at the end of the month. That saves me quite a bit of cash. I am reading where the FDIC is standing by CITI for Wachovia to hold up to the earlier deal. I think Wachovia should abide by that agreement and just merge with CITI.

[Kootr]

Originally Posted by CTR36

I think Wells Fargo sucks. I don't like that bank but if they are giving the shareholders a better deal, then I guess we'll deal with it. I bank with Wachovia and get free ATM usage anywhere, they rebate me the non-Wachovia atm fees at the end of the month. That saves me quite a bit of cash. I am reading where the FDIC is standing by CITI for Wachovia to hold up to the earlier deal. I think Wachovia should abide by that agreement and just merge with CITI.

Bob Steele, WB CEO, has a fudiciary responsibility to take the best deal for his shareholders. That is a CEO's number one responsibility - its shareholders.

If the Fed demands that WB take the Citi deal it will still require a vote by shareholders and I strongly suspect that WB's BOD would suggest voting against the Citi deal. Nevertheless, I strongly suspect that WB shareholders would vote against the Citi deal regardless of what the WB BOD suggests.

Citi can sue, but I really think the pressure on the Fed would be overwhelmingly against the Fed requiring WB's shareholders taking a worse deal. Lastly, with the WFC deal there is no Fed involvement, which is something the Fed should want.

The whole deal with Citi was forced and went down in a matter of mere hours. The Fed was just wanting take care of things at the speed of light, not caring about the true outcome and what is best for everyone.

[Kootr]

Originally Posted by CTR36

I think Wells Fargo sucks. I don't like that bank but if they are giving the shareholders a better deal, then I guess we'll deal with it. I bank with Wachovia and get free ATM usage anywhere, they rebate me the non-Wachovia atm fees at the end of the month. That saves me quite a bit of cash. I am reading where the FDIC is standing by CITI for Wachovia to hold up to the earlier deal. I think Wachovia should abide by that agreement and just merge with CITI.

I've been a customer of WB since 1968, as well as a shareholder.

[Humboldt1]

Citi is in the process of filing lawsuits against Wells Fargo and Wachovia for breach of contract. I think Wells will end up with Wachovia, but they will have to pay a settlement to Citi in order to do so.

[Kootr]

Originally Posted by Humboldt1

Citi is in the process of filing lawsuits against Wells Fargo and Wachovia for breach of contract. I think Wells will end up with Wachovia, but they will have to pay a settlement to Citi in order to do so.

I'll bet WFC acquires WB and no settlement will be paid to Citi. WB shareholder would vote down the Citi deal with the recommendation by WB's Board to vote against it. It's up to the owners of the bank - the shareholders.

[texdav]

I thnik this will be contested in court most probably.Citi may get money withpout taking on Wacs bad debt.

[Humboldt1]

Deutsche Bank analysts seem to think that there was no binding clause holding Wachovia to its agreement with Citibank. If this is true, Citi needs to look at some new management or the very least new lawyers. I doubt Cit would have been so careless, though.

If Citibank can get a nice settle from Wells and not have to take on the troubled assets of Wachovia it is a win for Citi. Clearly, the market views this as a loss for Citi as it was down sharply today.

For me, working in the Chicago market, it would be better if Citi were to acquire Nat City or 5/3.

I just wonder how much the FDIC standing behind its agreement with Citibank this morning and Vikram calling it "illegal" is going to matter. Clearly, the market has spoken and usually the market is right, regardless of company propaganda.

[Kootr]

There was no contract when the WFC offer came in, just an agreement in principle. And the agreement stated that WB could not seek other offers, which they didn't. The WFC offer came out of the blue. WFC told Bob Steele (WB CEO) that if he did not take the WFC bid they would publicize it to the media on Friday morning. If Bob Steele was worried about being sued by Citi, he was also worried about being sued by his own shareholders for not getting his shareholders the best deal. Steel had the fuduciary duty to take the WFC offer to his Board and they agreed it was a better offer than Citi's, and WB had not sought another offer. WFC now has a CONTRACT with WB, which is something Citi did not have.

If the FDIC says that the Citi deal must stand WB shareholders must still approve the deal. I would expect that WB will recommend against the Citi deal to its shareholders. Then after the shareholders do not approve the Citi deal they can approve the WFC deal.

Citi needs to stop whining and outbid WFC if it really wants WB.

[floridasandy]

Originally Posted by Kooter

Bob Steele, WB CEO, has a fudiciary responsibility to take the best deal for his shareholders. That is a CEO's number one responsibility - its shareholders.

If the Fed demands that WB take the Citi deal it will still require a vote by shareholders and I strongly suspect that WB's BOD would suggest voting against the Citi deal. Nevertheless, I strongly suspect that WB shareholders would vote against the Citi deal regardless of what the WB BOD suggests.

Citi can sue, but I really think the pressure on the Fed would be overwhelmingly against the Fed requiring WB's shareholders taking a worse deal. Lastly, with the WFC deal there is no Fed involvement, which is something the Fed should want.

The whole deal with Citi was forced and went down in a matter of mere hours. The Fed was just wanting take care of things at the speed of light, not caring about the true outcome and what is best for everyone.

...but that sounds so unlike the fed!