Last week on the news Citigroup was said to be buying Wachovia with the help of the U.S. government. Citigroup had agreed to buy Wachovia's assets for $2.1 billion in a deal which was brokered by the Federal Deposit Insurance Corp. But, then on Friday, Wells Fargo upped the offer by saying they'd buy Wachovia for $15.1 billion and the deal would not require any government support.
This lead Citigroup and Wells Fargo into both state and federal court this weekend in a battle over Wachovia.
Citigroup sued Wachovia, Wells Fargo, and the directors of both companies for interfering with their planned takeover of Wachovia. They're seeking more than $60 billion in damages. The complaint says it's seeking more than $20 billion in compensatory damages and more than $40 billion in punitive damages from Wells Fargo for tortious interference.
Well now new reports are stating that Citigroup, Wachovia, and Wells Fargo have all agreed to a standstill of all formal litigation while a decision is trying to be reached regarding the fate of Wachovia. The standstill agreement will end at noon this Wednesday, unless it gets extended.
Citigroup spokesman Michael Hanrettasaid in a statement, "We are pleased to participate with the Federal Reserve Board in a fair-minded, good faith process to achieve a prompt and successful outcome."
Frederick Cannon, an analyst at Keefe, Bruyette & Woods, said, "If this goes into a protracted legal battle, everybody loses. Wachovia is big enough that it would be a negative for the financial system. Given that situation, we will see a resolution pretty quickly."
For me, I really don't know what to expect from all these buying activities on the market. Does it help the economy or will it lead to the problem of oligopolies?
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