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The saga continues. Wachovia is apparently accepting Wells Fargo's bid, relying on preferred shares issued to Wells Fargo in lieu of a "true" shareholders' vote. Elizabeth Nowicki has the details.

The merits of the underlying legal dispute are intriguing, to say the least. According to Elizabeth Nowicki, the plain language of Section 126(c) of the bailout means that Citigroup can't sue Wells Fargo for "deal-jumping" and stealing Wachovia out from under it. Oddly, though, Citigroup is apparently citing the same provision to sue Well Fargo. What gives? Steven Davidoff offers his thoughts:

Conversely, Citi?s argument is a parsing of the statute that arrives at the opposite conclusion. Having thought about this, Citi likely reads the clause about ?in connection with any transaction in which the [FDIC] exercises its authority under section 11 or 13,? to modify each of the three subclauses.

More specifically, Citi reads the statute as follows ?No provision contained in any existing ? agreement that, directly or indirectly ? affects ? the ability of any person to offer to acquire or acquire [a company] in connection with any transaction in which the [FDIC] exercises its authority under section 11 or 13, shall be enforceable.?

So Citi will likely argue that if the FDIC supports an offer to acquire, no ?other agreement? can prevent it. In other words Citi flips the clause on its head.

Davidoff now thinks that Citi has an uphill fight, and I'm inclined to agree with him...

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