Citigroup Inc, hobbled by US$61 billion of subprime-related losses, now faces its biggest takeover battle in a fight with Wells Fargo & Co for control of Wachovia Corp.
Citigroup fell as much as 21 percent on Friday in New York trading after Wells Fargo, the biggest US bank on the West Coast, agreed to acquire all of Charlotte, North Carolina-based Wachovia for US$15.1 billion. The bid trumped Citigroup’s government-backed offer of US$2.16 billion for Wachovia’s banking operations.
“The taxpayer doesn’t pay a penny” for the Wells Fargo deal, Wells chairman Richard Kovacevich, 64, said on Friday in an interview.
His company’s bid is superior to Citigroup’s also because it’s a higher price and the combining banks “share similar cultures and values,” he said.
Vikram Pandit, Citigroup’s chief executive officer, is counting on the Wachovia purchase to help rebuild after three quarters of losses totaling more than US$17 billion.
The bank’s market value has dropped 38 percent this year to about US$100 billion, leaving it below Wells Fargo.
If Wells Fargo winds up with Wachovia, it would creep up on its New York rival with deposits of US$787 billion, compared with Citigroup’s US$826 billion.
Pandit insisted Citigroup would prevail, citing an exclusive agreement signed by Wachovia. Kovacevich told investors during a conference call the deal with Wachovia is “solid.”
Citigroup demanded that Wells Fargo abandon the takeover. Buying Wachovia would give Citigroup the third-biggest US bank network and cement its status as the nation’s largest lender by assets.
“Any such agreement between Wachovia and Wells Fargo is illegal,” Pandit, 51, said in the e-mail on Friday. “We continue to vigorously pursue Citigroup’s interest and rights in completing this transaction.”
Citigroup may take legal action to block the deal, or may increase its offer, said a person with knowledge of the deliberations.
A court challenge and a bidding war aren’t the only possible roadblocks for Wells Fargo: Its offer may lead to a face-off with federal regulators.
The Federal Deposit Insurance Corp (FDIC) helped broker Citigroup’s purchase when Wachovia’s health faltered. Chairman Sheila Bair said until a review of Wells Fargo’s offer is completed, the agency will stand behind the Citigroup deal.
“We wanted to make clear that until things are settled with what’s going on with this Wells bid, that the Citi deal was still there,” Bair said on Friday in an interview on Bloomberg Television’s Political Capital with Al Hunt, to be broadcast over the weekend.
Bair said the FDIC was reviewing the offer, and she told Hunt: “You shouldn’t” assume the US opposes Wells’ offer.
Other bank regulators said they haven’t evaluated Wells Fargo’s offer.
“We have not yet reviewed the new Wells Fargo proposal and the issues that it raises,” the Federal Reserve and Office of the Comptroller of the Currency said yesterday in a statement.
“The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability,” the statement said.
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
TikTok abounds with viral videos accusing prestigious brands of secretly manufacturing luxury goods in China so they can be sold at cut prices. However, while these “revelations” are spurious, behind them lurks a well-oiled machine for selling counterfeit goods that is making the most of the confusion surrounding trade tariffs. Chinese content creators who portray themselves as workers or subcontractors in the luxury goods business claim that Beijing has lifted confidentiality clauses on local subcontractors as a way to respond to the huge hike in customs duties imposed on China by US President Donald Trump. They say this Chinese decision, of which Agence
RSS