Last last night, a New York judge issued an injunction tolling the termination of Wachovia’s Exclusivity Agreement with Citigroup. In addition, the judge set a show cause hearing date for next Friday to sort out the issue of whether Wachovia’s pending merger with Wells Fargo should be enjoined as a violation of Wachovia’s exclusivity agreement with Citigroup.
I blogged about this disfunctional three-party dance on Friday, and the WSJ Deal Journal reported some of my thoughts as well. I took the position that Citigroup is in a nice bargaining position, and the court’s order only strengthens Citigroup’s position.
Do I think Citigroup will ultimately acquire Wachovia’s banking assets? No. Do I think Citigroup will get a nice “go away, please” payment from Wachovia, with a kick-in from Wells Fargo? Yes.
I reserve the right to change this opinion, however, after I finish going through the 478 pages of bailout legislation passed on Friday to see if I am missing any hidden value Citigroup could get from Wachovia’s assets.