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Two independent federal agencies have cleared the way for rapid approval of
Wells Fargo & Co.'s $12.2 billion merger with Wachovia Corp.The deal will strengthen.
Wells Fargo's positions as the nation's third largest bank owner of ATMs and the country's second-largest debit card issuer.
In an unusual Sunday session, the Federal Reserve Bank's board of governors approved San Francisco-based Wells Fargo's takeover of Wachovia, which is based Charlotte, N.C. On Friday, the Federal Trade Commission gave its thumbs up to the deal. The New York Stock Exchange, where Wachovia's stock is traded, also enabled Wachovia shareholders to skip a stockholder vote normally required to approve the deal.
The FTC's and Fed's actions close one chapter in the battle between Wells Fargo
and Citigroup Inc. for Wachovia and possibly open a new one. Wells Fargo announced last week it is proceeding with its merger of Wachovia. Wells Fargo put a rush on the deal, and the FTC complied. The government antitrust enforcement agency called for completion of a review by it or the U.S. Justice Department before the end of a 30-day period required under antitrust law.
San Francisco-based Wells Fargo moved ahead with its plans for Wachovia after discussions between Wells Fargo and Citigroup Inc., the other Wachovia suitor, broke off last Thursday.
Citi announced Sept. 29 that it reached an agreement-in-principle to acquire Wachovia in a deal engineered by the Federal Deposit Insurance Corp. Citi was so confident the contract was a done deal Wachovia's name appeared on Citi's Web sites.
But Wells Fargo announced Oct. 3 that it reached a definitive agreement to buy
Wachovia in an all-stock transaction without financial assistance from the federal
government. Wells Fargo's statement was an obvious reference to the deal engineered by the FDIC to have New York-based Citigroup buy Wachovia. Citigroup agreed to pay $2 billion for certain Wachovia assets.
After Wells Fargo disclosed its agreement, Citi, citing its "exclusivity agreement"
with Wachovia, sued Wells Fargo. The Federal Reserve Board, however,
intervened and called for discussions between the two banks to resolve the dispute.
The banks had until Friday to settle the issue. In a statement, Citibank said,
"The dramatic differences in the parties transaction structures and their views of
the risks involved made it impossible to reach a mutually acceptable agreement."
Citi says, however, it will seek compensatory and punitive damages for "bad
faith, breach of contract and tortuous interference," which could lead to a new
round of battles between Citi and Wells Fargo.
Wells Fargo, which operates a bank network of 6,950 ATMs, nearly will double the
size of its network to 12,227 machines coast to coast. Wells remains the third-largest bank owner of ATMs behind Charlotte, N.C.- based Bank of America Corp. and JPMorgan Chase&Co., which is based in New York.
In the debit card market, Wells Fargo is the second-largest issuer, with 17.5 million
cards. Wachovia is the fifth largest with 10.5 million cards. Wells Fargo will have a
combined total of 28 million cards, mostly Visa-branded cards, second in size to Bank of America.
