Citigroup appears to have even less of a claim on Wachovia than I previously thought, on the basis of transaction documents posted late Sunday night by the New York Times (copy below the jump). The documents include an affidavit of Wachovia CEO Robert Steele and the Wachovia-Wells Fargo merger agreement. It appears, from these documents and others filed earlier by Citigroup, that if there’s a bad corporate citizen in this game, it’s Citigroup.
Citi appears to have done a poor job of working up its bid for Wachovia (grossly underestimating its value) and an even poorer job of attempting to pin down Wachovia to actually do the deal. In addition, it appears that Citi may have deliberately leaked the confidential “Exclusivity Agreement” to the press and put on a public (though questionable) show of legal force in order to batter Wachovia’s stock price and, thereby, make the deal an even better one for Citigroup.
Wachovia’s brass, on the other hand, appear to have done a masterful job under very trying circumstances — made all that much worse by federal government meddling — of putting itself in a position to create an auction environment for its own sale. Brilliant work, Mr. Steele. The subtext is that Wachovia appears to be worth much more than anyone thought a week ago. Likely, Citigroup will have more to put on the record. But what they’ve offered so far is distinctly unimpressive.
By the way, The Deal Professor’s conclusion, “It is now Oct 3, in case anyone is counting. So, the Wells Fargo deal clearly violates the explicit terms of this agreement,” was premature. These new documents make it appear more likely that Wachovia did not violate the exclusivity agreement while Citigroup did violate the confidentiality agreement.