A bid for a company is just a bid, until it's a deal

— -- Q: If Citibank said it was buying Wachovia wb for $1 a share, why is the stock still trading for more than that?

A: The battle for Wachovia probably surprised just about everyone.

While banking giant Lehman Bros. was left to fail, and Merrill Lynch and Washington Mutual were pushed into marriages with banks that have deep pockets, there's was a bidding war for Wachovia.

Citigroup announced a deal to buy Wachovia for $1 a share in stock on Sept. 29, with heavy assistance from the government. But Wells Fargo wfc entered the fray and offered $7 a share without government help. Investors. betting the Wells Fargo deal would go through, pushed Wachovia's stock up around the deal price.

Investors are often baffled when they see a stock trade for more than the price offered by a suitor. Generally, that means the offer was low and could be raised, or there's another bidder in the wings prepared to offer more.

That was the case with Wachovia. But be careful, because it's not always the case. A target company's stock can easily fall close to the original buyout price if another buyer doesn't emerge.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.