Alea

To gazump: raise the price of something after agreeing on a lower price

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Citi reacts: Wachovia-Wells Fargo bid breaches exclusivity pact
Citi hits out at Wachovia-Wells deal

Posted by jck at 7:57 am ET on October 3rd, 2008 |

6 Responses to “ Gazumped ! ”

# 1 barry Says:
October 3rd, 2008 at 8:25 am

So it looks as if the bailout arbs are starting. Wells will sell to TARP at a premium the toxic waste accquired from WB. TARP has provisions that assets accquired ina merger can be sold above the original purchase price.

Unintended consequences, indeed.

# 2 jck Says:
October 3rd, 2008 at 8:42 am

I would like to think it is not unintended consequences, the objective of TARP must be to stop the rot and assuming that the Wells/Wachovia is driven by TARP ( I doubt it but who knows…), then TARP is already working…
I am not a big fan of bailouts but at this time, lack of action just increases the ultimate cost, even if the entire $700 bn is lost this is quite cheap in terms of GDP, if it does the job of stopping the rot. Some bailouts cost as much as 25% of GDP ( spain, scandinavia..), translate in USD we are in the 2/3 trillions range.
I have seen one of the latter from close in argentina a few years back and I guarantee you that you don’t want that to happen in a country where everybody has a gun.

# 3 barry Says:
October 3rd, 2008 at 9:33 am

As a cynic, I am curious as to why Steele just didin’t wait a few weeks before he could start unloading onto TARP himself. Were things that bad at WB that he needed this merger when the bailout billions were just a few weeks away?

# 4 jck Says:
October 3rd, 2008 at 9:43 am

They must have been pretty bad, but I think Steel had no choice, the FDIC forced the sale or at least the hunt for a savior. Run on deposits ?

# 5 barry Says:
October 3rd, 2008 at 10:53 am

Looks like Citi is going to sue WB and Wells over this!

NEW YORK, Oct 03, 2008 (BUSINESS WIRE) — Citi today issued the following statement:
Wachovia’s agreement to a transaction with Wells Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo’s conduct constitutes tortious interference with the Exclusivity Agreement.

# 6 jck Says:
October 3rd, 2008 at 11:22 am

Thx, Barry, just saw that…added a link.

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