Press release from C:
CITI STATEMENT ON WACHOVIA'S BREACH OF EXCLUSIVITY AGREEMENTWachovia's agreement to a transaction with Wells Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo's conduct constitutes tortious interference with the Exclusivity Agreement.
The Exclusivity Agreement provides, among other things, that Wachovia will not enter into any transaction with any party other than Citi, and will not participate in any discussions or negotiations with any third party. The Exclusivity Agreement also provides that the parties would be irreparably harmed by any breach of the agreement and that the remedy of specific performance of the agreement is appropriate.
Citi was negotiating in good faith and nearly completed the definitive agreements required to consummate the Citi/Wachovia transaction that was announced on Monday. The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia's closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday's announcement.
Citi has demanded that Wachovia and Wells Fargo terminate and not proceed with any proposed transaction, any conduct in furtherance thereof, or any other act in violation of the Exclusivity Agreement. Citi has substantial legal rights regarding Wachovia and this transaction.
With or without this transaction, Citi maintains an unmatched, globally dominant franchise with strong liquidity, total deposits exceeding $800 billion and a Tier 1 capital ratio of 8.7% as of the second quarter.
Posted by guest , Oct 03, 2008 10:59AM
So stupid it hurts. If Citi wins this, WB shareholders get screwed, and the taxpayer is on the hook. The government (and WB shareholders) are going to tell Citi to go pound sand.
Posted by guest , Oct 03, 2008 11:01AM
http://www.marketwatch.com/news/story/pimco-manage-bailout-assets-free/story.aspx?guid=%7BFB52D93C-3176-4CEB-9613-EE7E4FA02DD2%7D
Posted by guest , Oct 03, 2008 11:02AM
In other words, with the help of the Feds, Citi was able to fleece the WB shareholders and now they want that enforced.
I thought Wall Street was supposed to change now that we're passing a massive rescue bill. No, at least at Citi, it's the same old slime.
Posted by guest , Oct 03, 2008 11:05AM
Citi's new ad campaign to feature J. Timberlake.
Cry me a river...
Full Stopy
Posted by guest , Oct 03, 2008 11:06AM
Tortious interference means we have no case whasoever but we are going to sue you anyway and hope you will be so scared you will run away.
Posted by guest , Oct 03, 2008 11:06AM
Cruz Missile says fuck you Pandit.
Posted by guest , Oct 03, 2008 11:08AM
C to hire Joe Jamail
Posted by guest , Oct 03, 2008 11:09AM
Doesn't the board at WB have a fiduciary duty to the shareholders that trumps any exclusivity agreement they had with Citi?
Posted by guest , Oct 03, 2008 11:09AM
Maybe Citi shouldn't try and piss of the gov't because they will probably need there help shortly
Posted by Phobos , Oct 03, 2008 11:10AM
It's obvious what happened:
http://dealbreaker.com/2008/09/washitty.php#comments#8
The Genie failed you Vikram: be a big boy, pick up your toys, and go home.
Posted by guest , Oct 03, 2008 11:10AM
Pandit is back bitches!
Yeah, maybe not.
Posted by guest , Oct 03, 2008 11:11AM
See Lurker FDIC post - it seems that FDIC is still backing C/WB deal...
We have taken a turn for the surreal people.
Posted by guest , Oct 03, 2008 11:11AM
House Debating|Bailout Plan
damn lazy interns.... ;)
Posted by guest , Oct 03, 2008 11:12AM
A deal is a deal... Wachovia would be dead meat by now if it weren't for Citi's support last week. WFC was at the table last week and they walked away and now they want to change their minds after the market has stabilized?
Posted by guest , Oct 03, 2008 11:12AM
If you sign a contract saying you're going to buy a car and then the car dealer sells it to someone else, how would you feel, you idiots? Citi is well within their rights.
Did you miss this part? Ignorant jacka$$es...
The value of the Citi agreement to Wachovia shareholders was substantially in excess of Wachovia's closing price on Thursday, October 2nd. Citi has also been providing liquidity support to Wachovia Bank since Monday's announcement.
Posted by guest , Oct 03, 2008 11:14AM
@8
You mean that same board that approved the Golden Shower Financial deal that lead Wachovia into the heart of this shit storm? You would think so.
Posted by guest , Oct 03, 2008 11:15AM
http://www.bloomberg.com/apps/news?pid=20601087&sid=anpijpx6lpec&refer=home
Posted by guest , Oct 03, 2008 11:16AM
@16 - the car isn't owned by shareholders who are represented by a board who has a fiduciary duty to get those shareholders the best value... stupid analogy
Posted by guest , Oct 03, 2008 11:17AM
15 Except its not a contract of sale.
Posted by guest , Oct 03, 2008 11:21AM
If this is the way the game is played, C should buy WAMU for $1. WAMU is worth more than what JPM stole it for, and WAMU shareholders got zip for it.
Bottom line is WB would have failed if C didn't step in, WFC had the same chance to bid and didnt...too late. at least C gave WB shareholders a buck.
Posted by guest , Oct 03, 2008 11:22AM
House Debating|Bailout Plan
damn lazy interns.... ;)
Joe "I'm gonna buy pussy" Jamail
Posted by guest , Oct 03, 2008 11:22AM
This is just pure pussy sabre rattling. WFC has a stronger balance sheet and is buying WB as a whole and giving shareholders some value. Oh and no gubiment backstop.
Vikram and his goons will get hung by their balls in court if they proceed.
--Lurker
Posted by guest , Oct 03, 2008 11:22AM
@18
Fiduciary duty extends to the breaking of contracts?
@19
It's still a broken contract. It would be inappropriate and a breach of duty for Citi's board to cede any rights.
Posted by guest , Oct 03, 2008 11:23AM
I agree. C has every right to be pissed at being made use of. They need to go back to the original plan!
WFC did not bid for Wachovia given the chance over the weekend. Now they want to pull wool over Pandit's eyes!
Go fuck off! The indian is back with a vengeance.
Buyers winners. Skippers weepers.
Posted by guest , Oct 03, 2008 11:24AM
@15 Agreed, Golden West was a pretty terrible decision. But now, WB has a little more at stake as the target rather than the buyer. I'd say that WB's shareholders will be happy to fit the legal bill to quash Citi's suit.
Posted by EricM , Oct 03, 2008 11:26AM
Pandit denies losing Wachovia because of napping.
Posted by guest , Oct 03, 2008 11:26AM
Gubiment is one of the most annoying words ever made up... right along with ginormous and sammich.
Posted by guest , Oct 03, 2008 11:27AM
Don't you think that smart M&A lawyers are all over this, on both sides? Part of the game in these kinds of transactions. The comments here are worth s!!t.
Posted by guest , Oct 03, 2008 11:27AM
Vik is a Claymate.http://www.clayaiken.com/
Posted by guest , Oct 03, 2008 11:28AM
@23 - It's the breaking of an exclusivity agreement, which under DE law is subject to a fiduciary out.
Posted by guest , Oct 03, 2008 11:28AM
The sale of WB to Citi has to be approved by the shareholders, regardless of whether the contract provides for specific performance. That said, if WB breached the contract and there's no fiduciary out language, Wachovia has to have a rememedy. I'm not sure how you prove damages on a deal that involves incurring 42 billion in losses though. Isn't there a termination fee?
Because WB was on the verge of collapse and the FDIC was running an auction, it probably wasn't a breach of the directors'fiduciary duties to agree to a really strict exclusivity clause. But given that Wells is offering a lot more money, the directors would definitely get sued if they didn't try to get out of the Citi deal. I guess they'll get sued either way. Should be interesting.
Posted by guest , Oct 03, 2008 11:29AM
What must it take to get that smile back on his delicate face???
http://nymag.com/images/2/daily/intel/08/01/18_citibankattack_lgl.jpg
Posted by guest , Oct 03, 2008 11:29AM
@20
well said. if C didn't step up (which WFC didn't), WB would be bankrupt and there would be a disaster. C deserves WB for taking the risk.
Posted by guest , Oct 03, 2008 11:30AM
Pandit got schooled....good luck with the lawsuit trying to prevent a deal the regulators prefer...jv
Posted by guest , Oct 03, 2008 11:32AM
@27...fuck off asshole. Gubiment is slang - or ebonics.
Got eat a fuckin sammich.
Posted by guest , Oct 03, 2008 11:32AM
Let's see, buying a car or buying one of the largest banks in the US and A. Perfect analogy. I'll tell you what, why don't you (a Chitibank employee is my guess) get Count Vik and go down to the Wachovia car lot. Ask for the manager this time, not just a salesmen. That's my trick. Hey, these are tough times so that advice is on me. Tell him that you had a deal and you're not leaving unless you get the car. Done.
Then you and Vikram can crank up AC/DC on your bitchin' new XM radio. Chiti never sleeps, although they nap from time to time. Kind of like now when Wells kicked them in the balls.
Posted by guest , Oct 03, 2008 11:34AM
This exclusivity agreement means just about nothing. They didn't even have the terms of the actual asset purchase papered yet, which makes it even harder for Citi to point at damages from WB's failure to follow the letter of the agreement.
So, how you going to enforce the exclusivity arrangement? Court orders WB to specifically perform its obligations under the exclusivity agreement. In which case, WB board says "OK", goes back to negotiating table with Citi and tells them no deal unless every to-be-terminated employee gets a new Ferrari. Not "good faith" you may say? Prove it. Real hard to do now that you have high priced lawyers creating a paper trail focused on potential litigation.
Think there's any way that WB's shareholders vote for a deal where they get a paltry amount of cash due to a shotgun sale and get no upside if those shitty GW mortgages end up being a bit less shitty once everything sorts itself out in the end?
So, all of this is just a exercise in futility for Citi. And it makes me giggle. It is called corporate democracy, Vikram, and you can't have the Fed contract around it for you when the bank hasn't failed yet. Ass.
Posted by guest , Oct 03, 2008 11:35AM
This exclusivity agreement means just about nothing. They didn't even have the terms of the actual asset purchase papered yet, which makes it even harder for Citi to point at damages from WB's failure to follow the letter of the agreement.
So, how you going to enforce the exclusivity arrangement? Court orders WB to specifically perform its obligations under the exclusivity agreement. In which case, WB board says "OK", goes back to negotiating table with Citi and tells them no deal unless every to-be-terminated employee gets a new Ferrari. Not "good faith" you may say? Prove it. Real hard to do now that you have high priced lawyers creating a paper trail focused on potential litigation.
Think there's any way that WB's shareholders vote for a deal where they get a paltry amount of cash due to a shotgun sale and get no upside if those shitty GW mortgages end up being a bit less shitty once everything sorts itself out in the end?
So, all of this is just a exercise in futility for Citi. And it makes me giggle. It is called corporate democracy, Vikram, and you can't have the Fed contract around it for you when the bank hasn't failed yet. Ass.
Posted by guest , Oct 03, 2008 11:36AM
@37,
Pretty sure you're the man.
Posted by guest , Oct 03, 2008 11:39AM
These are difficult and strenuous times, to say the least.
I expect to see a lot of court-approved violations of the so-called 'sanctity' of many predatory contracts.
We are now in a survival-of-the-system mode, not in the sanctity-of-the-predatory-contract mode.
Citi is throwing shit at WB, hoping that something will stick. They're going to waste a lot of money on expensive, predatory lawyers, that's all.
The Guy from Delaware
Posted by guest , Oct 03, 2008 11:41AM
looks like Citi took ambien last night...
Posted by guest , Oct 03, 2008 11:42AM
Next time a bank is on the verge of collapse, wait and see if someone's going to step in on short notice.
Posted by guest , Oct 03, 2008 11:43AM
This is unrelated, but I think highly important from a pointless gossip perspective - does anyone know the wording of the new Barclays slogan that is now running across the marquee of the (former) Lehman Brothers building? I saw it last night but can't remember exactly how it was worded - something about "Putting the client first"...?
Kudos to anyone who knows.
Posted by guest , Oct 03, 2008 11:44AM
@ 35 - Gladly.
If you aren't black, why are you using that terminology?
Posted by guest , Oct 03, 2008 11:47AM
@44...you racist.
Posted by guest , Oct 03, 2008 11:48AM
this is like 2 old ladies fighting over an old cardigan sweater at a flea market.
Posted by guest , Oct 03, 2008 11:48AM
re: @31 and @37 and damages:
On the one hand, how do you even allege damages when you're only talking about a 96-hour period? We had a "maybe" deal and it didn't close, so we get damages?
On the other hand, I'm no lawyer, but I think there's some notion of "reliance," such as if you made plans (e.g., bypassed other opportunities) because you were relying on some indication of an agreement from someone else. The catch is that CITI DID A BIG STOCK OFFERING MONDAY to pay for the prospective deal. They could certainly say they wouldn't have done that otherwise.
Posted by guest , Oct 03, 2008 11:52AM
If this wasn't a royal screwing for the WB shareholders, why is Citi so pissed off? In a market-based, well shopped, legitimate deal in what used to be a capitalist country, your real damages are the time and effort you put in performing diligence, negotiating the transaction, queueing up integration, etc. I'm sure Wells would be happy to provide Citi with the $500,000 spent in actual man hours by the lawyers and bankers who've worked oh so hard on getting this deal done for the last 5 days (see, people, diligence on a deal like this would normally take many, many months). Oh, and maybe even repay Citi a risk adjusted rate of return on the liquidity it so graciously provided over the past 4 days.
Citi's ultimate argument here is: well, the market was manipulated in our favor, and we're a big bank and our balance sheet sucks and we're too big to fail so we're arbitrarily picked by the government to get a windfall and . . . and . . . and, well, damn it, we simply had a deal (except, we didn't have a deal because there was only an 'agreement in principle').
Fuck Citi.
Posted by guest , Oct 03, 2008 11:53AM
Merrill should back out of BOFA...
Posted by guest , Oct 03, 2008 11:53AM
Dont know terms but contract probably not enforceable. Citi is dumb. Gotta go.
Posted by guest , Oct 03, 2008 11:55AM
@45 - How does that make me a racist? Google "ebonics" it is "African American vernacular".
Posted by guest , Oct 03, 2008 11:56AM
Bear should back out of the JPM deal.
Posted by guest , Oct 03, 2008 12:00PM
@47: Citi did a big stock offering on Monday because its balance sheet feltches balls. That would be my argument.
Posted by guest , Oct 03, 2008 12:05PM
@46
Well said!
Posted by guest , Oct 03, 2008 12:05PM
@46
Well said!
Posted by guest , Oct 03, 2008 12:08PM
@51...suck balls.
Yes, I'm very mature
TGFD
Posted by guest , Oct 03, 2008 12:11PM
This is a cause of concern. Next time, no bank will want to help FDIC take over a bank prior to failure.
FDIC really mess it up this time. They wanted WB to be taken over without the stigma of a failure and they end up screwing C. Let's see if there's any bank who's willing to be the fool next time.
Whatever it is, FDIC has to take responsibility and make sure WB goes to C. Period.
Posted by guest , Oct 03, 2008 12:14PM
ersatzTGFD@#56...
TGFD is a friend of mine. In fact, I see him when I look in the mirror. I can tell you this; you're no TGFD.
The Guy from Delaware
Posted by guest , Oct 03, 2008 12:15PM
Well-stated:
http://www.clusterstock.com/2008/10/is-citi-c-just-trying-to-look-less-stupid-or-did-its-lawyers-screw-up-
Posted by guest , Oct 03, 2008 12:16PM
@ TGFD & 36- STFU. No one like you here, leave.
It's like arguing with an idiot. I am stupider for even reading your comments.
I'm done.
Posted by guest , Oct 03, 2008 12:23PM
I hope WFC will end up like Texaco and be forced to file for bankruptcy for this impunity. That'll teach those Middle Americans from messing with Shitty!
Posted by guest , Oct 03, 2008 12:23PM
O.k. sorry, THE REAL TGFD, didn't mean to offend you, just the other asswipe.
Posted by guest , Oct 03, 2008 12:24PM
Lehman should undo their bankcruptcy filing....
Posted by Investorcluzo , Oct 03, 2008 12:28PM
bottom line, this is a home run for wb. the stock was clearly going to be a bagel. the fact that tax laws changed to make the acquisition more attractive (if the reports are true - I haven't checked) after the original announcement with vic could be "material" but not "adverse". that said, I'm sure the lawyers will find a way to make sure wb does right by its shareholders.
I'm not sure citi actually sold shares already. it would be foolish, especially if the deal hadn't closed.
@57 - agreed, this sets a bad precedent (esp. if the fed brokered the deal in the manner reported).
@44/45/51 - stop the madness. it was made racist when you stated:
"If you aren't black, why are you using that terminology?".
it's not "ebonics" (which isn't a language anyway) and it's not an exclusively "black" term.
Posted by guest , Oct 03, 2008 12:28PM
Face it, this has Goldman written all over it...
Paulson..
Steel..
Buffet..wfc, Goldman preferred...blah.blah..they are the house on this poker table...
Posted by guest , Oct 03, 2008 1:55PM
we should re-name Count Vikula as Count Chocula in honor of this shit storm
Posted by guest , Oct 03, 2008 4:25PM
Prince Vikram PanIndia will need Fed in 2 months.
Posted by guest , Oct 05, 2008 1:27AM
JUDGE ORDERS WB TO ONLY NEGOTIATE WITH C
...for now