Citi Statement on Wachovia's Breach of Exclusivity Agreement

Citi Statement on Wachovia's Breach of Exclusivity Agreement
New York – Citi today issued the following statement:

Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo's conduct constitutes tortious interference with the Exclusivity Agreement.

The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party. The Exclusivity Agreement also provides that the parties would be irreparably harmed by any breach of the agreement and that the remedy of specific performance of the agreement is appropriate.

Citi was negotiating in good faith and nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction that was announced on Monday. The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia's closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday's announcement.

Citi has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the Exclusivity Agreement. Citi has substantial legal rights regarding Wachovia and this transaction.

With or without this transaction, Citi maintains an unmatched, globally dominant franchise with strong liquidity, total deposits exceeding $800 billion and a Tier 1 capital ratio of 8.7% as of the second quarter.

Comments

[SWHMSC]

Why would the FDIC support the Wachovia transaction. Citi acted in a moment of crisis, and has since provided liquidity support. Allowing a third party to come in, under these circumstances, would severely limit the willingness of the Citi's of the world to take on responsibilities where it would have the risk but could lose any potential award by a late arriving third party. This would seem especially true where Wells Fargo had the chance to make a bid at the same time Citi make its bid, but chose not to do so until subsequent facts made it more attractive.

[tim bankerd]

Hang in there Citi!!! Remember the famous Pennzoil/Texaco deal? I wonder if Joe Jamail is still around?