Citigroup breaks off talks with Wells Fargo, Wachovia

Citigroup said this afternoon that it had stopped negotiating with Wells Fargo & Co. over a possible splitting up of Wachovia Corp.’s operations, citing “dramatic differences” in possible transaction structures.

In a statement, Citi said the New York bank will continue to pursue legal claims against Wachovia and Wells Fargo but will not seek to stop a Wachovia-Wells merger. All three banks have been under a legal ceasefire until 8 a.m. Friday.

Citi agreed on Sept. 29 to buy most of Wachovia for $1 per share with assistance from the Federal Deposit Insurance Corp. That deal left behind Wachovia’s asset management and brokerage businesses. Wells, however, swooped in four days later with a deal to buy all of the bank for $7 per share. Wachovia’s board approved the Wells transaction but never signed off on a definitive merger agreement with Citi.

Citi said in a statement: “We are proud to have been part of an historic transaction that was supported by all of the federal banking agencies and the Secretary of the Treasury, after consultation with the President, and that we carefully designed to avoid systemic stress and to advance the interests of our shareholders.”

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