Citi Has Upper Hand in Merger Fight, Law Prof Says
Wells Fargo’s deal to acquire Wachovia violates Wachovia’s exclusivity agreement with Citibank, which prohibits Wachovia from negotiating a merger with others prior to October 6, according to University of Connecticut School of Law Professor Steven M. Davidoff writing on NYTimes.com.
But that may not matter much, according to Davidoff, who is a former corporate attorney with New York-based Shearman & Sterling. Even though the term sheet requires specific performance, “it is hard to see how you can order specific performance on [the basis of] a term sheet,” says Davidoff.
“I think the most elegant solution is for Citi to match the Wells Fargo bid over the weekend and litigate the deal-protection devices in Friday’s transaction as illegal. This is a better case to pursue than a tortious interference case on a three-page letter in New York, even though the letter is very clear on the issue,” he writes.
Read the exclusivity agreement here.
