Friday, October 10, 2008

Wells Fargo/Wachovia Combination Receives Premerger Clearance

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Wells Fargo & Company’s acquisition of Wachovia Corporation will not be challenged by the federal antitrust agencies.

On October 9, the parties received early termination of the report-and-wait period under the Hart-Scott-Rodino Act. Wells Fargo announced the same day that it was proceeding with the combination, after Citigroup, Inc. ended negotiations with Wachovia.

Wells Fargo sought expedited approval of the transaction from the Federal Reserve Board. The Federal Reserve Board said in an October 9 statement that it would “immediately begin consideration of the filings.” In an October 12 press release, the Board announced its approval of the transaction.

Wells Fargo and Wachovia announced on October 3 that they had entered into a definitive merger agreement for the companies, including all of Wachovia’s banking operations in a whole company transaction. The parties said that the transaction required no financial assistance from the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

Citigroup Offer

The Wells Fargo/Wachovia deal came while a Citigroup offer for the ailing Charlotte, North Carolina-based bank was pending.

In an October 3 news release, Citigroup called Wachovia's agreement with Wells Fargo a clear breach of their exclusivity agreement, which prohibited Wachovia from entering into a transaction with another party.

On September 29, Citigroup had announced that it reached an agreement–in-principle to acquire all of the banking subsidiaries of Wachovia. Citigroup said that it intended to acquire more than $700 billion of assets of Wachovia's banking subsidiaries, and related liabilities and that the FDIC would provide loss protection in connection with approximately $312 billion of mortgage-related and other Wachovia assets. The deal was “supported by all of the federal banking agencies and the Secretary of the Treasury, after consultation with the President,” according to Citigroup.

Citigroup has said that it will not ask that the Wells Fargo-Wachovia merger be enjoined. However, it plans to pursue claims of breach of contract and for tortious interference with contract against Wachovia and Wells Fargo and their officers, directors, advisors.

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