Too bad if you had stock in it.
Citigroup Agrees to Buy Wachovia's Banking Business (Update4)
By Steve Dickson and David Mildenberg
Sept. 29 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, will acquire banking operations of Wachovia Corp. for about $1.6 billion after shares of the North Carolina lender collapsed under the weight of overdue mortgages.
The all-stock deal equals about $1 a share for the Charlotte-based bank, ranked sixth by assets in the U.S. All depositors will be protected, according to the Federal Deposit Insurance Corp., which helped broker the takeover by Citigroup. The New York-based bank plans to cut its own dividend in half and raise $10 billion in capital as it takes on Wachovia's senior and subordinated debt.
Wachovia is the latest casualty of a financial crisis that drove Lehman Brothers Holdings Inc. and Washington Mutual Inc. into bankruptcy and led to the hastily arranged rescues of Merrill Lynch & Co. and Bear Stearns Cos. The purchase gives Citigroup about 3,300 branches and offices in 21 states. Wachovia will continue to own the A.G. Edwards Inc. brokerage and the Evergreen mutual-fund family.
"The problem must have occurred last week with their ability to continue to attract and hold deposits after the failure of Washington Mutual," said Gary Townsend of Hill- Townsend Capital in Chevy Chase, Maryland. "On Thursday and Friday they must have had a large run on the bank."
Wachovia's stock, which finished last week at $10 on the New York Stock Exchange, traded for 95 cents at 9 a.m. in early transactions. It had lost 83 percent in the past two years as of last week. Trading today was halted during regular hours. Citigroup fell 1.4 percent to $19.86 as of 10:19 a.m.



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