Can someone explain to me why C shouldn’t be pissed, and then explain why we should be upset with C for being pissed? Three days ago Wells told them to go pound sand, but after C stepped in and we get our bailout they want back in?
C+WB deal already has regulator’s approval; WFC+WB deal doesn’t yet. Looks like Paulson will have to make sure phone call again.
Citi has a fiduciary responsibility to push, however, given that they were being financed by the gov’t for this purchase, not exactly arms length, this shouldn’t go through. Citi knows this and will not proceed too far (constituent reaction will be overwhelmingly against them). wells has been interested all along…this thing was a ruch job from the start, WFC is a lot more careful than other clowns running around trying to save their own skin. the never told them to “go pound sand” - they opted out of the process when they could get comfortable in short time period (shame on them for trying to be diligent!). WFC is so much better on so many fronts.
JDV- so i guess that rule wasn’t the MTM rule, but a tax rule. it has something to do with the amount that WFB can deduct from their taxes if they write off some of the bad assets. at least accd to CNBC.
Gecco Wrote: ------------------------------------------------------- > Gov’t should step in if Citi goes too far with > this. WFC is a truly private (and > superior)solution vs putting taxpayer money at > risk (and subsidizing citi’s bid). Force majeure > / should apply here, citi needs to take a seat, > and thank their lucky stars they even exist. > Anyway, I think citi is in pretty dire straights > itself, they may be the next to go after the smoke > clears. citi buying wb wasn’t doing anyone any > favors (how does 2 weak banks merging make it > better…only bigger). I don’t think force majeure applies here - WB can fulfill the contract but they found a better deal. Force majeure would apply, for instance, if Citi agreed to buy something from WB but the govt stopped it.
nolabird032 Wrote: ------------------------------------------------------- > JDV- > so i guess that rule wasn’t the MTM rule, but a > tax rule. it has something to do with the amount > that WFB can deduct from their taxes if they write > off some of the bad assets. at least accd to CNBC. Cool. Do you have a link not to a TV show?
I really think it would be a bad deal for Chipolte Mexican Grill, sorry to disagree
agreed, I used force majeure to highlight a point that we are in a “all bets are off” environment. Anyway, I forgot to mention that the citi deal was subject to a shareholder vote ayway, which was far from a sure thing. I don’t think WFC is going to keep the Chipotle Franchsie, doesn’t hold up to Mex fare in Mission.
Gecco Wrote: ------------------------------------------------------- > Citi has a fiduciary responsibility to push, > however, given that they were being financed by > the gov’t for this purchase, not exactly arms > length, this shouldn’t go through. Citi knows > this and will not proceed too far (constituent > reaction will be overwhelmingly against them). > wells has been interested all along…this > thing was a ruch job from the start, WFC is a lot > more careful than other clowns running around > trying to save their own skin. the never told > them to “go pound sand” - they opted out of the > process when they could get comfortable in short > time period (shame on them for trying to be > diligent!). WFC is so much better on so many > fronts. I’m not arguing what’s better for me as a taxpayer or investor, or the relative merits of either deal. You call it “diligence”, I call it “feet dragging which doesn’t deserve to be rewarded.” I mean, imagine if after JPM agreed to buy BSC for $2, someone else had come in with a higher non-government supported offer. JPM would rightly be livid. WB clearly has a strategic value well over $7 - just look at the respective stock movements today. All that said, Dick Kovacevich is the man.
Citi can be pissed. JPM would have been pissed. I don’t care about that. Even if Citi and WB had an inked contract, WB would just be breaking a contract so Citi would be entitled to damages from WB’s refusal to honor the contract. This is not possible gains that Citi could have earned because those are indeterminate. In this case, it’s pretty much minor costs and WB/WFC is probably going to pay them. The US gov’t should back out if they can.
Somehow, from the statement put out by the FDIC, I have this feeling that the regulartor favors the C+WB deal. But, what do I know…this is nothing but a feeling.
ws Wrote: ------------------------------------------------------- > Somehow, from the statement put out by the FDIC, I > have this feeling that the regulartor favors the > C+WB deal. But, what do I know…this is nothing > but a feeling. I agree with that, but I think it’s because they feel stupid offering up gov’t money when they didn’t need to.
^LOL, that is something new…government being stupid!!
JoeyDVivre Wrote: ------------------------------------------------------- > ws Wrote: > -------------------------------------------------- > ----- > > Somehow, from the statement put out by the FDIC, > I > > have this feeling that the regulartor favors > the > > C+WB deal. But, what do I know…this is > nothing > > but a feeling. > > I agree with that, but I think it’s because they > feel stupid offering up gov’t money when they > didn’t need to. Foot dragging? They were given VERY short time periods to conduvt diligence. What a surprise citi was quick to jump and rush the process (they have very little lose here, hence their ability to move quickly). Rewarded? How are they being rewarded paying >7x what citi paid, and they are taking the whole kit and kabboodle, with NO strings attached. FDIC should have known better and kept their mouths shut (what a surprise). A private solution to the problem, they should declare it a victory for taxpayers. FDIC should be backpedaling on this one as fast as they can. Agreed, citi should pursue recovery of expenses and any appropriate “deal breakage” fees. Shareholders hadn’t even approved this deal - costs should be minimal. Shareholders will be sure to approve the wells deal.
If I’m a WB shareholder why exactly would I approve this deal? They’re “generously” paying 30% of tangible book? The problem is WFC is buying a different entity - one that was supported by C, FDIC, and now ol’ HP for 3 days before making their move. If I’m a WB shareholder I’m kicking this one to the curb.
^Good point. The Wachovia on Sept. 26 (Last Friday Closing) is a different Wachovia on Oct 3rd.
tax rule change: http://www.dlapiper.com/files/upload/Tax_Alert_Oct08.html have you guys read the C / WB exclusivity agreement? It’s in the public domain and appears rock solid. Both parties agree a breach would irreparably harm the other counterparty and that monetary compensation will not do, only specific performance. should be interesting. plus i guess there have been some serious, serious tortious interference judgments in us corporate history. i agree that WB / WFC is better for pretty much everyone besides Citi. http://dealbook.blogs.nytimes.com/2008/10/03/citis-upper-hand-in-the-wachovia-fight/
So this is a contract that is so rock solid it can’t be broken? It’s still a contract and it’s still breach. It’s not like there is some special extra-double breach.
jus a correction here its the FDIC that brokered the deal, not the fed, not the treasury
So that agreement would be used by Citi to get an injunction to the deal going through with WFC. I doubt it would work, but possible. I don’t think there is a chance in heck that they could make the injunction permanent because the agreement itself has a termination date on 10/6. It’s a pretty silly piece of legal work IMHO. Edit: My awesome Google skills found it here (on the NY Times website) http://dealbook.blogs.nytimes.com/2008/10/03/the-citi-wachovia-exclusivity-agreement/