Wells Fargo buying Wachovia for $15.1B; too late, Citi says

NEW YORK -- "The market presence and composition of our businesses, along with our service-oriented cultures, are extraordinarily complimentary and this combination creates great potential for sustained stability and growth," Wachovia CEO Robert Steel said.

Wachovia shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte-based Wachovia stock they own, valuing Wachovia at about $7 a share. This is a nearly 80% premium over the stock's Thursday closing price of $3.91. Shares closed at $10 last Friday, the last trading session before the deal with Citigroup was announced.

The announcement sent Wachovia shares soaring about 74% at midday, to more than $6.80 — still vastly lower than the more than $51 it commanded a year ago.

But Citigroup said that Wells Fargo was too late, and demanded that its deal be scrapped: Wachovia had already agreed that it would "not participate in any discussions or negotiations with any third party" and that a breach of that agreement by Wachovia or Citigroup would leave the other company "irreparably harmed," Citigroup said in a statement.

Citigroup added that it has provided "liquidity support" to Wachovia since Monday, and has "substantial legal rights."

For Wachovia, though, "it seems like the legal risk of a potential lawsuit is offset by the better terms from Wells," says Keefe Bruyette and Woods analyst Jefferson Harralson.

U.S. banking regulators said Friday they will seek to resolve the rival acquisition proposals.