[JURIST] Citigroup Inc., Wachovia Corp. and Wells Fargo & Co. [corporate websites] announced Monday that they had reached an agreement [Citigroup press release] to freeze litigation activity until at least noon Wednesday. The agreement follows a weekend of legal maneuvering, when a New York State appellate judge reversed a court order extending an exclusivity agreement that bars Wachovia from considering or entering into acquisition proposals with parties other than Citigroup. Citigroup brought suit against Wachovia on Friday after Wachovia announced that it had agreed to merge [Wells Fargo press release] with Wells Fargo. Justice Charles Ramos, a trial judge with the Commercial Division of the New York Supreme Court [official website], granted emergency injunctive relief to Citigroup on Saturday, extending the exclusivity agreement [Citigroup press release] with Wachovia until further order. On Sunday, Justice James M. McGuire of the Supreme Court Appellate Division [official website] overturned that order, in part because Ramos made it while outside the state. Wachovia filed a federal lawsuit [complaint, PDF] Saturday in US District Court for the Southern District of New York [official website], requesting that the court enter an order declaring the agreement with Wells Fargo "valid, proper, and not prohibited" by its exclusivity agreement with Citigroup. On Monday, Citigroup filed yet another state lawsuit against Wachovia and Wells Fargo, claiming that both had interfered with the acquisition process. Bloomberg News has more.
Wachovia and Citigroup reached an "agreement in principle" [Wachovia press release] last Monday providing that Citigroup would acquire a substantial portion of Wachovia banking operations for about $2.1 billion. As negotiations faltered, Wachovia announced [press release] on Friday that Wells Fargo had offered to buy it as an intact company for $15.4 billion. Wachovia is one of several major financial institutions that have failed or sought mergers [JURIST report] amid turmoil in the subprime investment market [academic backgrounder]. On Friday, President Bush signed into law [JURIST report] a $700 billion bill intended to stabilize financial markets. The Emergency Economic Stabilization Act of 2008 [PDF text] authorizes the US Treasury to purchase troubled assets from financial institutions and to provide insurance and guarantees for any troubled asset originated before to March 14, 2008.