Bankruptcy

Wells Not Citi Buys Wachovia!

By J. Michael McBride

In a prompt about face, the assets of Wachovia will be acquired by Wells Fargo and not CitiGroup. The new plan evidently calls for a purchase of Wachovia for 15.1 billion in an all stock deal with no FDIC involvement. This contrasts starkly with the proposed Citi deal, which would have been an asset purchase, with only some of the Wachovia debts being transferred to Citi and would have required federal assistance. “Wachovia Corp. shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock's Thursday closing price of $3.91. Shares closed at $10 last Friday, the last trading session before the deal with Citigroup Inc. was announced.” Clearly this is a much better deal for the shareholders of Wachovia and the question is whether it is a good deal for the purchaser, Wells Fargo. That question will be answered once the true value of the Wachovia debts are tallied and that could be a long (or a very short) process. Once again, things are moving so fast that it is impossible to know the details of any deal until well after the fact.

Here is a link to one article:
http://biz.yahoo.com/ap/081003/wells_fargo_wachovia.html?.v=8

Michael

Full post as published by Texas Lawyer Blog on October 03, 2008 (boomark / email).