Citigroup Cries Foul on Wells Fargo-Wachovia Merger

CHARLOTTE, NC-The battle between suitors for locally based Wachovia Corp. escalated over the weekend after Citigroup Inc. raised objections to a merger between Wachovia and Wells Fargo & Co. that was announced earlier in the day. New York-based Citi says the proposal, which would supersede its own deal to buy Wachovia through an arrangement with the FDIC, constitutes a breach of agreement.

“Citi has substantial legal rights regarding Wachovia and this transaction,” the company stated shortly after the Wachovia-Wells Fargo announcement Friday morning. Citi, which began promoting its own merger with Wachovia earlier this week, added that it has already provided liquidity to Wachovia that prevents it from talking to anyone else.

Saturday night, Citi exercised those rights by obtaining an order from a New York State Supreme Court judge blocking the deal between Wachovia and San Francisco-based Wells Fargo. Then a federal judge blocked the state order Sunday night, setting a Tuesday hearing on the matter in a lower Manhattan courtroom.