Turmoil ensues as Wells, Citi fight for Wachovia

In our last issue, we made it sound as though the $2.16 billion acquisition of Wachovia's banking assets by Citigroup was a done deal. We alerted you to the acquisition, by the way, because Citigroup is the largest manager of tax-exempt bonds--an important vehicle for many healthcare organizations--and you can never tell what difference such a change in ownership structure would make.

Well, what a difference a week makes. Only a couple of days later, Wells Fargo came in with a $7 a share competing offer, far besting Citi's $1 a share bid. Wells Fargo is proposing to buy both Wachovia's brokerage and banking operations, a move that would create a huge entity that would rival Citibank on the retail banking side of the house.

Now, Citi and Wells Fargo are locked in a legal battle over the right to gobble up Wachovia. As of this writing, Citigroup had won a legal victory from a New York judge, which temporarily blocked Wells Fargo from negotiating with Wachovia by extending Citi's exclusivity agreement. However, analysts say Wells Fargo is far from out of the game, given the fact that it's bidding more and that the buyout won't call for government assistance (which Citi's will).

To learn more about this battle:
- read this Associated Press article

Related Article:
Healthcare lending leader Citigroup acquires Wachovia