Twist: Wells Fargo to buy Wachovia

Wow! The world thought Citigroup had a government-assisted deal to buy Wachovia's banking operations for $1 a share. But that deal seems to have been scuttled for a better deal (for shareholders) with Wells Fargo, which had been itching to buy a bank. Wells Fargo, a safe-haven institution right now, is offering about $7 a share. It touted that the deal requires no government assistance and said it will raise up to $20 billion by issuing new shares. This creates a juggernaut of a retail bank, one that will rival Citigroup, and will keep Wachovia intact. The big issue of course is Wachovia's portfolio of toxic mortgages, much of which stems from its ill-advised purchased of Golden West. Wells said it would mark the assets to fair value, presumably at a big loss that will be offset by the capital raise.

For more:
- here's the New York Times article
- view the press release

Related Article:
Citigroup to buy Wachovia