Wells Fargo Swoops in with Wachovia Offer

Wells Fargo made a surprise bid for Wachovia Friday and trumped Citigroup who had agreed to buy assets from the troubled bank last week.

The Wells Fargo bid is an all-stock $15.1 billion deal that takes over all of Wachovia's businesses. The earlier Citi agreement acquired all of Wachovia's commercial banking operations but left it as a public company holding its brokerage, AG Edwards and Evergreen.

Shares of Citigroup fell 12% on the deal, while Wells Fargo gained 8.1%. The deal values Wachovia at $7 per share, 76% higher than its closing price on Thursday.

The unexpected bid from Wells Fargo comes after the close of an auction process that was supported by the U.S. Federal Deposit Insurance Corporation.

"Since the close of our bidding process, Wells has apparently re-assessed its position and come forth with this new offer that does not require FDIC assistance," said FDIC Chairman Sheila Bair in a statement.

"The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest," Bair said.

By Adam Button and edited by Sarah Sussman
©CEP News Ltd. 2008