Wachovia, suitors extend litigation standstill to Friday

Charlotte ObserverOctober 8, 2008 

Wachovia, Citigroup and Wells Fargo, in consultation with the Federal Reserve, said they will extend their litigation truce until 8 a.m. Friday.

New York-based Citi and San Francisco-based Wells Fargo are jousting over who gets to buy the Charlotte bank. After a flurry of litigation, the three sides reached a “standstill agreement” that was set to expire today at noon.

With Wachovia in faltering financial condition, Citi last Monday said it was buying Wachovia for about $1 per share, with assistance from the Federal Deposit Insurance Corp. Left behind would be the bank’s brokerage and asset management businesses. On Friday, however, Wells came in with an offer to buy the whole company for $7 per share, which Wachovia accepted.

Lawsuits have been filed in at least three courtrooms in New York and North Carolina. Wachovia is suing Citi in federal court in New York, arguing its deal with Wells is “valid and proper.” Citi is suing Wells in New York state court, seeking $60 billion from Wells for breaking up its deal.

The truce has allowed Wells and Citi to negotiate a possible splitting up of Wachovia’s operations as a way to resolve the fight. The Federal Reserve has been an active player in these talks.

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