For months, as he endured hearings on Capitol Hill and fought off a series of lawsuits, Bank of America CEO Ken Lewis trudged through a post-apocalyptic financial landscape against a steady drumbeat of questions about his future. The deal he had called “the strategic opportunity of a lifetime” — his purchase/salvage of Merrill Lynch — had swung from an act of patriotism, keeping the American way of banking from utter ruin, to a scandal over Merrill losses and bonuses.

Perhaps he should have seen the writing on the walls of the vacant houses financed by Countrywide, the mortgage lender Lewis purchased/salvaged just six months before the Merrill deal. The two transactions may have been strategic gems, but they were laced with political poison as the economy floundered toward its dramatic deleveraging and taxpayers pumped $20 billion into Bank of America to fund the Merrill deal.

“It was only a matter of time,” Campbell Harvey, a professor at Duke University’s business school, told Jon Stempel. “There is too much collateral damage.” As Stempel reports, Lewis spent north of $130 billion on acquisitions, including FleetBoston Financial Corp, the credit card issuer MBNA Corp, LaSalle Bank Corp, Countrywide, Charles Schwab Corp’s U.S. Trust private banking unit, and Merrill. In buying Merrill, he added a giant investment bank to what was already the largest U.S. retail bank, credit card issuer and mortgage provider. (Wells Fargo & Co has since become No. 1 in mortgages.)

Lewis plans to be gone by the end of the year and leaves no immediate successor, so Bank of America has only a few months to figure out who to anoint. Though his demise is a cautionary tale, odds are good that the bank’s worst days are behind it. An incoming chief can blame Lewis for any ill-conceived agreements surrounding Merrill. More importantly, with economic recovery apparently at hand, Lewis’ deals of a lifetime have a better chance than ever of paying off.

It seemed only a bit odd that media star Arianna Huffington was the guest host on CNBC the day the all-important stress test results were due. Not to play down her credentials in media or commentary circles, but where were the celebrated bank analysts, the corporate chieftains and the investment gurus who so routinely enjoy a dose of the limelight on America’s Business Channel?

Wasn’t this the perfect day for a newsmaker rather than a news talker? The Huffington Post founder has been a good reality check on market cheerleaders who live on CNBC, but on Stress-Test Thursday, the less-than-casual viewer expects insiders with insight. It tasted like something strange and exotic had made its way into the DealZone coffee machine.

Then disgraced former New York Governor and Attorney General Eliot Spitzer joined the fray, and the slightly odd became surreal. Spitzer, who casually noted he was invited to the show (hint, hint), gave a spirited view from the nosebleed seats, far back from the federal policymakers’ bench.

Forget all this stress test stuff — what about Spitzer’s attempt at resurrection? Anchor Joe Kernen asked whether Spitzer the AG would have prosecuted Spitzer the governor and Spitzer the guest legal expert answered no, arguing that issues of judgment are more important than issues of law.

This should be equally true for the banks, Spitzer said. But the banks’ transgressions were far more damaging to many more people than Spitzer’s own. It’s hard to believe moral suasion and limiting access to cheap funds would have been enough to persuade greedy bankers to act more responsibly. Certainly, shareholders would not have rewarded them for behaving better while others were making a killing selling toxic investments.

DealZone commends CNBC’s producers and guest bookers for creative thinking. While the stress test results are not due until late this afternoon, so much has been leaked already that the minutiae still to come will probably numb the minds of even the hardiest financial news junkies. With no news to break, the Huffington/Spitzer show turned out to be refreshingly watchable. Indeed, who understands a stress test better than Eliot Spitzer?

Deals of the Day:

* Anheuser-Busch InBev said it agreed to sell its South Korean Oriental Brewery to private equity firm Kohlberg Kravis Roberts & Co for $1.8 billion, allowing the world’s largest brewer to repay debt.

* Global miner Rio Tinto Ltd/Plc has not talked to Chinese state-owned metals firm Chinalco about revising a planned $19.5 billion tie-up, and still believes the deal makes sense.

* Australian blood-products and vaccines maker CSL said U.S. competition regulators had yet to make a decision on its proposed $3.1 billion takeover of smaller rival Talecris Biotherapeutics Holdings Corp.

* Australian brewer Lion Nathan, which has agreed to a $2.5 billion takeover by Japanese brewer Kirin, halted trade in its shares on Thursday on concerns the confidentiality of its talks with Kirin may have been breached.

* U.S. coal miner Peabody Energy and Anglo-Swiss miner Xstrata plan to bid for a majority stake in Indonesian coal miner PT Berau Coal in a deal that may be valued at around $1 billion, two sources with direct knowledge of the deal said.

* Porsche Automobil Holding SE stock fell as much as 17 percent after the sports car maker scrapped attempts to take over Volkswagen and agreed to explore a merger with Europe’s biggest carmaker.

* Magna International has so far presented a more concrete proposal on General Motors unit Opel to the German carmaker than Fiat, Opel’s supervisory board member Armin Schild told Reuters.

(PHOTO: New York Governor Eliot Spitzer stands next to his wife Silda Wall Spitzer as he announces his resignation at his office in New York March 12, 2008. REUTERS/Brendan McDermid)

Perhaps the best that can be hoped for from the upcoming week of stress test anxiety is that once it is over, a modicum of uncertainty will be gone as well. Sometime today, we should know how heavy the yardstick used in the tests was. The banks either already know or will soon find out whether they passed, and on May 4, expect all kinds of whooping and hollering outside the Deans’ office when the results are officially posted. Of course, there is a pretty good chance that as the banks find out the test results, the news will find a way out, so May 4 may turn out to be somewhat anti-climactic.

What happens next is still a bit vague. There is much talk about officials force feeding more funds to stressed-out banks. And despite the bad press on shotgun marriages — what with NY AG Andrew Cuomo stomping his feet over alleged pressure applied to Ken Lewis for Bank of America to take over Merrill Lynch — financial matchmakers will certainly look at the failures as prime candidates for synergistic harmonization.

But for the optimist, the market truism that the end of uncertainty is always a good thing could come as a welcome spring break for the troubled financial sector.

(PHOTO: A man hits a punching bag depicting a “boss”, as part of a test to measure his stress level, in a Madrid hotel July 3, 2007. Spanish hotel chain NH organized the promotional event which involved the smashing up of one floor of the hotel before its remodeling.  REUTERS/Sergio Perez)

Deals of the day:

* Italian power-grid operator Terna SpA sold a 66 percent stake in its Brazilian unit for 2.33 billion reais ($1.06 billion) to Brazilian power firm Cemig, as it focuses on developing the grid.

* China Huiyuan Juice said it is unaware of the source of news reports that suggested Coco-Cola has resumed discussion with the company.

* Shares in Italian Internet service provider Tiscali SpA were up 10 percent in early trading after MF newspaper said it expected to get a binding offer from British telecoms group Carphone Warehouse for its British assets.

* The Irish government is likely to take further shareholdings in the country’s banks, the Irish Times newspaper quoted a cabinet minister as saying.

(Updated with references from Paul Kanjorski’s office)

Lined up to pay their dues, Wall Street CEOs met their congressional inquisitors on Capitol Hill, sparking bouts of righteous indignation peppered with cringe moments worthy of The Office.

Pennsylvania Democrat Paul Kanjorski implored the posterboys for an era of high finance gone bad to “please find a way to return that money before you leave town,” referring to hundreds of billions of dollars in taxpayer bailout funds that officials believe were poured into unwarranted bonus payments instead of being used to revive the business of lending to America. At least he said please.

The message was clear. Though they may never have been instructed to lend the funds when they got them, that’s what Congress wanted. Bankers need to get back to the business of lending. That’s what they were being bailed out for. Never mind that the business of lending, conducted with adequate credit checks, was not what they were doing before, and that prudence in a period of high inflation would preclude much new lending today.

Kanjorski, chairman of the House subcommittee on capital markets and insurance, is himself the subject of a telling tale of befuddlement making its way around the Internet. In an interview on C-Span he said money market investors pulled $550 billion from their accounts, prompting the Fed to step in on Sept 15 and stop the panic by closing money market accounts. His estimation was that “$5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed.”

It looks increasingly like he didn’t have all his facts in presentable, working order. Felix Salmon of Portfolio.com says he can’t find any reporting of money market funds being closed by the government, and neither can we. Andrew Leonard at Slate.com also questions the numbers. Kajorski’s office pointed us to a September New York Post article citing traders as saying money markets were pushed to the wall with $500 billion in sell orders, about a fifth of the entire market, and comments the congressman made at a hearing with then Treasury Secretary Henry Paulson, apparently referencing this report.

Keeping in mind that Paulson was just one of a long list of Goldman Sachs grads to become a top policy maker it’s not terribly surprising that neither the rocket scientists of Wall Street nor angry congressional committees seem well suited to the job of restoring confidence in the financial sector.

Other Deals News:

* Chinese state-owned aluminum group Chinalco will invest $19.5 billion in miner Rio Tinto in a deal that will secure resource supplies for China and help cut Rio’s debts, but also raise regulatory scrutiny.

* Rio Tinto Ltd/Plc will sell nearly half its stake in the world’s biggest copper mine, nearly a third of its share in a major bauxite mine and sizeable stakes in key operations in Australia, Indonesia and the Americas in a $12.3 billion asset deal announced on Thursday.

* Spanish competition authority CNC has approved Gas Natural’s 16.7 billion euro ($21.58 billion) bid for Union Fenosa with conditions, a spokeswoman for the regulator said on Thursday.

* General Motors has been in talks with China’s SAIC Motor about the possible sale of a share of GM’s stake in their joint venture or other assets as the U.S. automaker races to raise cash, two sources familiar with the discussions said.

* Japanese video games maker Square Enix has agreed to buy the British firm behind titles such as “Tomb Raider” and “Championship Manager” for 84.3 million pounds ($120.8 million) to extend its reach in Europe.

* Satyam Computer Services Ltd’s board expects to outline the bidding process for a possible sale of the fraud-hit firm in the next 10 days time, Chairman Kiran Karnik said on Thursday.

* Thailand’s Bank of Ayudhya (BAY) said on Thursday it was in talks with financial institutions to buy more retail banking businesses following last week’s acquisitions from AIG.

* German retail and tourism group Arcandor is not in talks with Wal-Mart, the world’s biggest retailer, Thomas Middelhoff said on Thursday, pouring cold water on earlier market talk.

(PHOTO: Combination photograph of Wall Street bank executives testifying before House Financial Services Committee on Capitol Hill in Washington, February 11, 2009. Top row (L-R), are: Bank of New York’s Robert Kelly, JPMorgan Chase’s Jamie Dimon, Goldman Sachs’ Lloyd Blankfein and Wells Fargo’s John Stumpf. Bottom row (L-R), are: CitiGroup’s Vikram Pandit, Morgan Stanley’s John Mack, Bank of America’s Ken Lewis and State Street’s Ronald Logue.  REUTERS/Larry Downing)

It is amazing how the prospects of a grilling in Washington can make Wall Street’s CEOs behave. Until a little while ago, these were the masters of the masters of the universe. An elite group of highly paid stars who rarely showed signs of vulnerability, who rarely seemed to doubt their place at the top of the heap. But take a look at the testimonies they have prepared for today’s hearing at the House Committee on Financial Services and it looks like they have begun to embrace the new era, the new religion.

You would be forgiven in thinking they had all also hired the same speechwriter. They mostly stress they are prudent, frugal, humble, though not quite yet apologetic — it will be interesting if that changes once the grilling begins. Here are some of the themes:

Public anger towards Wall Street is justifiable:
“It is abundantly clear that we are here amidst broad public anger at our industry. In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public. Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system’s stability.” — Lloyd Blankfein, CEO of Goldman Sachs Group.

“I know the American people are outraged about some compensation practices on Wall Street. I can understand why.” — John Mack, CEO of Morgan Stanley.

Bailout money from the government is not being used to reward bankers or executives (though they don’t quite explain how this is achieved):
“We have not used any of the government investment for dividends, bonuses or compensation of any kind — nor will we.” –John Stumpf, CEO of Wells Fargo.

“We have NOT used it to pay compensation — nor did we use it to pay any dividends or lobbying costs.” — John Mack, CEO of Morgan Stanley.

The government bailout money is being used for lending:

“We are still lending, and we are lending far more because of the TARP program.” — Kenneth Lewis, CEO of Bank of America.

There is a need for increased regulation, particularly of systemic threats:
“We need fundamentally improved systemic regulation.” –John Mack, CEO of Morgan Stanley.

“…in my view, long-term recovery will elude the financial industry unless we modernize our financial regulatory system and address the regulatory weaknesses that recent events have uncovered.” — Jamie Dimon, CEO of JPMorgan Chase & Co.

Greater transparency in the markets is desirable:
“We need greater transparency in our financial markets both for investors and regulators.” –John Mack, CEO of Morgan Stanley.

The government should be paid back as soon as possible:
“When conditions allow and with the support of our regulators and the Treasury, we look forward to
paying back the government’s investment so that money can be used elsewhere to support our economy.” — Lloyd Blankfein, CEO of Goldman Sachs Group.

“It’s our goal and our desire to repay the taxpayers in full as soon as possible.” — John Mack, CEO of Morgan Stanley

The previous ways of doing things don’t apply anymore:
“We understand that the old model no longer works and the old rules no longer apply.” — Vikram Pandit, CEO of Citigroup.

There are many efforts to keep defaulting homeowners in their homes:
“In the last year, we have kept approximately four out of five distressed borrowers whose mortgages we service in their homes. We have extended our foreclosure moratorium to help millions of other eligible homeowners whose mortgages we service.” — Vikram Pandit, CEO of Citigroup.

They are doing everything they can to restore confidence in the banking system:
“We are absolutely committed to doing our part — and working closely with the Congress, our regulators and our clients — to get the economy solidly back on its feet.” — Robert Kelly, CEO of The Bank of New York Mellon.

“I am pleased to be here today to assure the Committee that we at JPMorgan Chase are doing everything we can to help restore confidence in the U.S. financial system.” — Jamie Dimon, CEO of JPMorgan Chase & Co.

They are responsible and prudent:
“We do business and lend money the old-fashioned way — responsibly and prudently.” — John Stumpf, CEO of Wells Fargo.

They embrace frugality and humility:
“We are frugal. Last year, our overall corporate expenses actually declined one percent while our revenue rose over seven percent.” — John Stumpf, CEO of Wells Fargo.

“The real issue, I believe, is this: taxpayers feel, and rightly so, that if a bank is having sufficient trouble to require public support, all its financial decisions should signal a conservative, sober and frugal approach to the financial health of the company.” — Kenneth Lewis, CEO of Bank of America.

“The financial services industry is undergoing wrenching change. One thing we know is that we will be a smaller industry. And that’s not a bad thing. Obviously, the rapid growth of our industry in recent years was overdone. Now is a good time to remind ourselves that we play a supporting role in the economy — not a lead role. Our job is to help the real creators of economic value — people who make things, and people who use them — get together and do business. We bankers should find some humility in that.” — Kenneth Lewis, CEO of Bank of America.

(PHOTO: Chairman of the House Financial Services Committee Barney Frank (R) (D-MA) and ranking member Spencer Bachus (L) (R-AL) during questioning of  Chairman of the Federal Reserve Ben Bernanke during a hearing on Capitol Hill in Washington February 10, 2009.    REUTERS/Kevin Lamarque)

Citigroup may be too big to fail, but is it big enough to close a deal? Soon after losing its bid for Wachovia to Wells Fargo, Citi turned it sights on Chevy Chase Bank, which while not as mighty as Wachovia, was at least closer to its east coast power base. This morning, Capital One Finance said it had agreed to buy the mid-Atlantic lender, right out from under Citi’s nose.
 
JP Morgan Chase had also been interested in Chevy Chase, a smallish, unlisted lender. The deal announced by Capital One was for $520 million - hardly the kind of blockbuster that makes or breaks a battered Wall Street monolith. 
 
It will be interesting to see if Citi, brimming over with TARP funds that the Treasury has all but begged it and others to spend on lending, stays on the prowl. Bank of America took its TARP money and boosted its stake in a Chinese lender, so there is some precedent for Citi to spend the funds on a deal.
    
But with Citi’s wallet stuffed with taxpayer cash, the impetus for growth may be less imperative. If it decides against bidding for the deposits of another regional bank, Citi will find itself with only financial assets to sell — in a seller’s market.
    
It agreed to sell its German retail business, which it put on the block over the summer with a price tag of around $8 billion, and at the end of November reports emerged it would try to sell its trust bank unit in Japan for more than $400 million. 
 
Deals of the day:

* Goldman Sachs said it has rejected an offer from Panasonic to buy its shares in Sanyo Electric because it believes the offer price is too low.

* Rio Tinto is in talks to sell its half of a Chinese aluminium joint venture to its partner, which is consolidating its assets to prepare for a takeover by another state-owned company, sources in the two Chinese companies said.

* Japanese insurance group T&D Holdings may bid for two Japanese life insurers put up for sale by American International Group, the Asahi newspaper reported.

* Nippon Oil, Japan’s biggest refiner, is merging with smaller Nippon Mining Holdings in a move to cut capacity and costs as a global slowdown hits demand for oil products.

* Private equity firm Apax Partners is considering an investment in Bank of Ireland as interest in Irish banks by buyout groups continues to grow, the Financial Times reported.

* Media mogul Sumner Redstone has agreed with his daughter, Shari Redstone, to sell some of National Amusements’ 1,500 cinemas rather than the entire division, the Financial Times said citing people familiar with the matter.

* Global Investment House, Kuwait’s biggest investment bank, is in talks with several local banks to get $1 billion worth of loans, while seeking a quick sale of its stake in a Bahraini lender, it said.

* Dutch dredging group Boskalis Westminster dropped its bid to buy maritime services company Smit, saying it would be difficult to take it over without management’s cooperation.

* Wm Morrison, Britain’s fourth-biggest grocer, beat third-quarter sales forecasts and said it had agreed to buy 38 stores from the Co-operative Group for 223 million pounds ($329 million).

* Aerospace parts supplier Umeco said it bought Italy-based Industria Plastica Monregalese (IPM) for 16.8 million euros ($21.3 million) as part of its plans to develop a wider global presence in the wind energy market.

* Italian energy group Enel SpA denied a media report it had offered Acciona 12 billion euros ($15.2 billion) for the Spanish builder’s 25 percent stake in Endesa.

(Photo: Reuters/Fred Prouser)

Citigroup 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.  
 

Banks aren’t lending to each other, but they are buying each other. An interesting by-product of the deals: capital-hungry institutions are raising billions of dollars of fresh capital in a tumbling market.
 
Bank of America said yesterday its tier-one capital ratio would be 7.5 percent in the third quarter, down from 8.25 percent in the second quarter, spurring it to launch a $10 billion share offering and cut its dividend. On a conference call, it said it could raise even more to help manage the purchase of Merrill Lynch. Wells Fargo planned to raise $20 billion to fund its bid for Wachovia, while rival suitor Citigroup aimed to raise $10 billion to buy that bank. Those two are taking a three-day break from a legal battle over who gets what.  
 
If Citigroup loses out on Wachovia, Dan Wilchins points out, it will also miss out on a great chance to raise capital. Citi would likely have a much easier time raising capital to fund its growth than to patch holes on its balance sheet. The bank has raised $50 billion of capital in the last seven months, and its management has consistently said that it has raised more than it expected to need, he reports. But that could all change in a recession, as credit cards, investment banking, and retail brokerage businesses lose customers. 
 
Once the dust settles, ruthlessly diluting shareholders may show itself to have been absolutely necessary, and perhaps even unavoidable. But now with the markets in freefall, it’s more than a little scary. 

Deals of the day:

* Singapore state investor Temasek Holdings kicked off the sale of electricity generator PowerSeraya, in a deal that could fetch around $2.5 billion. To read more, please double click on 

* Icelandic investment firm Exista will sell its near 20 percent stake in Finnish insurer Sampo to reduce liabilities but will keep its other assets, the group said in a statement.

* Commonwealth Bank of Australia said it has started exclusive talks with British bank HBOS about a potential takeover of BankWest, HBOS’ Australian operation, estimated to be worth A$2 billion ($1.45 billion).

* British military consumables maker Chemring Group is buying a U.S. mine-detection systems company for an initial $30 million, to boost its explosive ordnance disposal (EOD) business.

* Fletcher Building , New Zealand’s largest building products and construction company, said it would buy steel products company Fielders Australia Pty Ltd.

* Japanese apparel maker Renown said it may sell British clothier Aquascutum as part of restructuring that could also include it selling its offices and a distribution centre in its home country. Shares in Renown fell more than 16 percent after a local newspaper reported that the company would sell 155-year-old British raincoat maker Aquascutum by February.

* Royal Caribbean Cruises said it has agreed to sell its 50 percent stake in Island Cruises to a unit of British-based tour operator TUI Travel, which owns the other half.

* Wireless technology group Wavecom branded an unsolicited offer by Gemalto as hostile and said it undervalued the company. 

* South Korea’s Hanwha Group is considering selling 20 percent of its life insurance unit to fund its possible purchase of Daewoo Shipbuilding & Marine Engineering, a source close to the company said.

* Malaysia’s Maybank has been offered another 15 percent stake in Bank Internasional Indonesia at a discount to its original offer price that will cut the total price by more than 200 million ringgit ($57.39 million).

It seemed like the natural order of things had returned for a short while last week. Wells Fargo had outbid Citigroup to take over Wachovia, and as an added treat, they did not plan to tap government funds to do it. Apparently caught unawares, the jilted suitor sued saying its exclusivity agreement had been broken. If the parties had had a signed merger deal, rather than just an exclusive agreement to talk, Wachovia would have been obliged to pay Citi some kind of break-up fee. But the waters are murkier this time. So instead, the now fully engaged Federal Reserve is acting as broker in what has become a frantic legal spat between the banks.

The Wall Street Journal reported that the Fed is pushing the two banks to compromise by potentially carving up Wachovia between them. Having already decided a purchase of Wachovia is an issue that has significance for the stability of the financial system, the Fed continues to view resolving the confusion over who is buying one of the nation’s biggest banks as important, a Treasury source told us, adding that discussions were continuing late last night.

What could motivate the Fed to intrude where the free market seemed to be working so well? Citi shares saw their first substantive rally in a long while when their Wachovia deal was announced. It was getting a sweet deal, with government backing, that was seen as a game changer for the mammoth bank. Without that deal, the Fed may be more worried about what to do about Citi than whether a Wells, Wachovia deal makes sense.

Who will win the battle for Wachovia? Place your bets in the news prediction website Hubdub:

What happens to Wachovia?

Deals of the day:

* BNP Paribas has scooped up Fortis’s assets in Belgium and Luxembourg to become the euro zone’s biggest deposit bank after a weekend of frantic talks with the authorities in the two countries eager to stem a cash drain on Fortis and Dexia banks.

* The Australian unit of H.J. Heinz will buy food producer Golden Circle in a deal valuing the canned fruit and juice producer at about A$288 million ($220 million), the companies said.

* British outsourcing group Xchanging and its Mauritius unit have made an open offer to acquire 20 percent of Cambridge Solutions at 81.11 rupees a share, according to a notice in a newspaper.

* Thai steel firm G Steel said that Japanese trading house Mitsui & Co planned to acquire a stake in it.

* Hungary’s MOL has won 21.7 percent of Croatian oil group INA in a public bid, raising its stake to 46.7 percent, but it may still gain a majority as final results will be known only later this week.

Wells Fargo said on Friday it reached a deal to buy Wachovia for about $15.1 billion out from under Citigroup’s nose.

We still haven’t heard back from Citi, so the question now is whether Citi simply walked away from a deal it - and the market - had seemed so excited about just days ago or whether it will come back with another bid. The latest from Citi’s website is that they are committed to the Wachovia transaction - that was Sept. 30.

Another bid? A bidding war? A bidding scuffle?

Seems unlikely in this time of failures, toxic waste and bailouts, and Citi certainly has plenty of trouble of its own. But Warren Buffett and others have been quite vocal about the great deals out there to be had, and certainly Wells Fargo seemed to have missed the boat when Citi made its initial bid — which was worth $2.16 billion for everything but AG Edwards and Wachovia Securities and included a fund business.

Wells is ponying up for the whole Wachovia. Citi’s share price was tanking in premarket trade, and analysts were quick to note that the failure of a Citi/Wachovia deal is as big a blow for Citi as it was for struggling Wachovia. While a full-out war for Wachovia seems unlikely at this point, a higher price for Wachovia can’t be anything but a good thing for a market that has spent months trying to figure out how to value dud bank assets.

Deals of the day:

* Mitsubishi UFJ Financial Group will consider merging its securities arm with Morgan Stanley’s Japan business, as Tokyo’s biggest lender looks to capitalize on its $9 billion Wall Street investment.

* Ukraine-focused oil and gas explorer Regal Petroleum denied it had received a $1.2 billion takeover approach from oil Major Royal Dutch Shell.

* Japanese property firm Daito Trust Construction shelved a planned buyout that could have exceeded $6 billion, after the funds behind the deal failed to raise enough money amid the global credit crunch.

* Plans by Ireland’s Elan Corp to sell its drug delivery unit in an auction have been delayed by the credit crisis but some discussions are still continuing, people familiar with the situation said.