In a stunning reversal, Wachovia said Friday that it planned to be acquired by a rival bank, Wells Fargo, for about $15.1 billion in stock.
The announcement came four days after Citigroup believed that it had cemented a deal with Wachovia to buy most of its banking operations for $1 a share, or $2.2 billion, in a deal brokered by federal regulators. With Wachovia on the brink of collapse, the government agreed to cover any losses above $42 billion, an indication of the urgency of regulators to get a deal done.
But Wachovia has now apparently rejected Citigroup in favor of Wells Fargo in a deal that calls for Wells Fargo to buy all of Wachovia for $7 a share and requires no assistance from the federal government. Wachovia customer deposits would be protected in both deals.
Still, the agreement requires the approval of Wachovia shareholders and regulators. The Federal Deposit Insurance Corp., which brokered the Citigroup-Wachovia deal, said Friday that it "stands behind its previously announced agreement with Citigroup."
Officials from the Federal Reserve, the Treasury Department and the Office of the Comptroller of the Currency were all involved in original Citigroup-Wachovia deal. It is unclear how they will respond.
By: eric dash
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