Citigroup Ends Negotiations Over Wachovia Takeover

Citigroup Ends Negotiations Over Wachovia Takeover

Oct. 9 (Bloomberg) -- Citigroup Inc. walked away from its attempted purchase of Wachovia Corp., handing victory to Wells Fargo & Co. in a struggle for the nation's sixth-biggest bank.

Citigroup had offered two weeks ago to buy the Charlotte, North Carolina-based lender's banking operations for $2.2 billion in a government-assisted transaction. That bid was trumped last week by San Francisco-based Wells Fargo's $15 billion offer for the entire company. The two spent this week negotiating a possible split of the assets.

``Wells Fargo just won, lock stock and barrel,'' said Tony Plath, a finance professor at the University of North Carolina at Charlotte. ``I guarantee this is a done deal now.''

Wells Fargo gains control of a bank with $448 billion of deposits in 21 states. The agreement values Wachovia at $7 a share and includes the entire company, without any aid from the U.S. government. Citigroup's bid worked out to about $1 share, left out the securities brokerage and Evergreen mutual-fund units and was tied to help from the Federal Deposit Insurance Corp.

Wells Fargo and Wachovia reiterated the terms of their agreed takeover in regulatory filings today.

``The dramatic differences in the parties' transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement,'' New York- based Citigroup said today in the statement. Citigroup said it ``decided not to ask that the Wells Fargo-Wachovia merger be enjoined.''

Wells Fargo spokeswoman Melissa Murray and Wachovia's Christy Phllips Brown declined to comment on Citigroup's announcement.

While Citigroup isn't challenging the merger, the bank said it has ``strong legal claims against Wachovia, Wells Fargo and their officers, directors, advisers and others'' for breach of contract.

BLOOMBERG