Just Walk Away

October 10, 2008

wachoviaexit.jpgCitigroup investors welcomed news the bank had abandoned its brief but acrimonious battle with Wells Fargo over Wachovia Corp, driving its shares up 15 percent in after-hours trade. 

When Citi announced last week that it was buying Wachovia’s banking operations, investors sent Citi’s shares higher, hoping the purchase would allow the bank to raise much-needed capital while expanding its branch network. But this week, investors cheered that Citigroup was walking away from a deal that could have proven more toxic than either Citi or Wachovia had thought. 

By this morning, the euphoria that followed the deal’s collapse had faded. Citi shares had lost all of those gains of yesternight and were trading back near 12-year lows. Dodging a bullet doesn’t seem to have done anything about the quicksand. 
Deals of the day: 
* Mitsubishi UFJ Financial Group, Japan’s largest bank, said it has no plans to pull out of a planned $9 billion investment in Morgan Stanley, even as shares of the U.S. bank continue to tumble. 

* Shares in South Africa’s Telkom jumped almost 5 percent on Friday after Vodafone offered to pay it 22.5 billion rand ($2.48 billion) for a controlling stake in mobile operator Vodacom.
* Japan’s top drug wholesaler Mediceo Paltac Holdings will take over No. 2 Alfresa Holdings in a $2 billion stock deal to better cope with falling prices and tough competition.  
* Fortis Bank Nederland may be sold to Deutsche Bank instead of some of ABN AMRO‘s Dutch operations to replace a deal that has been put on hold with the nationalization of Fortis’s Dutch holdings, a Dutch paper said. 
* Abacus Group, a British distributor of electronic components, said it had agreed to a takeover offer from U.S.-based Avnet which values the company at about 42.2 million pounds ($72.93 million) 
* British natural resources consultancy RPS Group said it is buying smaller rival Paras for up to 6.4 million pounds ($11.03 million) in cash and shares, to complement its expansion strategy.  

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