Wells ruins Citi’s plan to buy Wachovia

Source: Exec Digital USA

Date :10/3/2008 9:45:34 AM

Wells Fargo & Co has agreed to buy Wachovia Corp in a deal worth US$15 billion without US government help, upsetting Citigroup’s plan to buy the troubled firm.

For each share of Wachovia, investors will receive 0.1991 Wells Fargo shares, which are equal to US$7, according to Reuters estimates.

The deal is a big blow to Citi, whose shares fell more than 10 percent in premarket trading.

Citi had said Monday, September 29, it reached a preliminary agreement to buy Wachovia's banking assets in a government-brokered deal. That deal was supposed to boost Citigroup's US deposit base and save Wachovia from ruin.

Wells Fargo is one of the few major US banks that has remained consistently profitable during the credit crisis. In contrast, Citi has posted more than US$17 billion in losses in the last three quarters.