Published: October 05, 2008 10:19 am         

Citi: Wells Fargo blocked from buying Wachovia

NEW YORK — The fight over control of Wachovia intensified Saturday, as a judge temporarily agreed to block the sale of the bank to Wells Fargo, Citigroup announced in a news release.

State Supreme Court Justice Charles Ramos issued the order blocking the sale of Wachovia Corp., which Wells Fargo & Co. had agreed to purchase in a $14.8 billion deal.

Citigroup Inc. accused Wells Fargo of trying to cut off its earlier takeover offer of Wachovia's banking operations for $2.1 billion in a deal struck with the assistance of the Federal Deposit Insurance Corp. On Friday, four days after that deal was struck, Wells Fargo said it was buying Wachovia.

The litigation pits two of the largest remaining financial institutions against one another as the ongoing credit crisis leads the federal government to arrange marriages and sales among banking entities.

Wells Fargo and Citigroup did not respond to messages left late Saturday seeking comment about the temporary order blocking the sale.

Wachovia spokeswoman Christy Phillips-Brown said in a statement the company believes its agreement with Wells Fargo is "proper, valid and ... in the best interest of shareholders, employees and the American taxpayers."

She said Citigroup is free to make a better offer to Wachovia under that agreement.

The FDIC said Friday that it "stands behind its previously announced agreement with Citigroup." It also said it would review all proposals and work with regulators of all three institutions to resolve the tug-of-war.

Citigroup says it has an exclusivity agreement that bars Wachovia from talking with other potential buyers. Its shares fell sharply after the surprise announcement of the Wells Fargo-Wachovia agreement.

     

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