What Citi wants

Citi Examines Its Carrots and Sticks

Excerpts:

Citi's also going to try to persuade the Wachovia board that they're underestimating the value of the stub Wachovia, which they'll continue to be in charge of if the Citi deal goes through. Maybe Citi's investment bankers are trying to find another buyer for what's left of Wachovia, to prove just how much it's worth. In any case, they're going to try very hard to demonstrate that the total value for Wachovia's shareholders from the Citi deal is significantly higher than just the amount that Citi is paying for the bank.

Then there's the more personal/emotional stuff. Citi will rake Wachovia's executives over the public coals if they get those golden parachutes as a result of accepting the Wells Fargo offer. At the same time, they'll promise to move the retail banking headquarters of a combined Citi-Wachovia to Charlotte, and to keep more Wachovia jobs, especially in Charlotte, than Wells Fargo might be inclined to do.

At the same time, Wells Fargo might be willing to pay some amount of money to Citi to make them go away, especially if it has a deal pretty much sewn up.

Comment: They want a break-up fee. 1 Billion should do it.

Wells Fargo Acquisition of Wachovia Conference Call Transcript

Excerpt:

Jason Goldberg - Barclays Capital

A couple of headlines flowing across I would hope you could react to; the first thing, Citi Believes It Has Exclusive Rights to the Wachovia Branch Operations and secondly, Fed Cautious About Wells Fargo Bid for Wachovia. If you could just talk to conversations with Citi and how that deal was structured with respect to this transaction? Why you think believe this deal supersedes that and any rights Citi may have, any breakup fees, etc.? And secondly, any comments you’ve had with the regulators with respect to this transaction?

Richard M. Kovacevich

We think that this deal is solid. We’re not aware of any merger agreements that had been consummated at the time. And as far as other issues, I haven’t seen anything in terms of issues that Citi has or doesn’t have. We feel very confident that this transaction has been done appropriately and we’ll continue and be consummated and we’ll go forward with it.