In New York Appeals Court, Wachovia Corp. has succeeded in over-turning the emergency order by Justice Charles Ramos issued yesterday in New York State Supreme Court which gave Citigroup Inc. the sole legal authority to negotiate with the bank. Citi announced last Monday they'd be buying some of Wachovia's assets. Wachovia said a deal made later with Wells Fargo on Friday to purchase the entirety of their assets is still legitimate.
Citigroup is going to appeal the the ruling.
Wachovia's lawyers argued the $700 billion bailout bill passed in Congress contains provisions that allow Wells Fargo to make their own bid if they please.
Wells Fargo announced on Friday that it would be buying Wachovia in a $15.1 billion transaction that requires no help from the Federal Deposit Insurance Corporation (FDIC) "or any other government agency," the company said.
On the other hand, Citigroup made a deal earlier last Monday to buy parts of Wachovia for $2.1 billion. The deal was pending as Citi awaited help from the FDIC. In a statement released yesterday, the New-York based bank said it would be meeting with Wachovia on October 10th, before Judge Ramos, and that "Citi has made clear it is prepared to resume negotiating in good faith to complete the transaction contemplated by the agreement-in-principle that Citi and Wachovia announced."
The Charlotte, North Carolina-based Wachovia released a statement today saying their deal with Wachovia "is proper and valid. The agreement is in the best interests of shareholders, employees, creditors and retirees as well as the American taxpayers and it imposes no risk to the FDIC fund."
"Under that agreement," the release said, "Citigroup is always free to make a superior offer to Wachovia."
By Megan Ainscow
©CEP News Ltd. 2008