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Big activist Wachovia shareholder to weigh in on competing deals
2008-10-03
SAN FRANCISCO - Activist hedge fund manager Bill Ackman is preparing to weigh in on Wachovia Corp. next week amid debate about which deal to acquire the banking giant is better for shareholders, according to a person familiar with the situation.Pershing Square Capital Management, the hedge fund firm run by Ackman, owns 7.8% of Wachovia (WB) shares. Wells Fargo (WFC) unveiled a $15 billion bid for Wachovia on Friday. That threatens to scupper a deal late last month in which Citigroup (C) agreed to buy Wachovia's banking business for more than $2 billion, with backing from the Federal Deposit Insurance Corp. Ackman is due to speak about Wachovia on Monday at the Value Investing Conference in New York, the person said on condition of anonymity. Wells agreed on Friday to pay 0.1991 of a share in stock for each Wachovia common share, valuing the Charlotte, N.C.-based bank at $7 a share based on Wells Fargo's Thursday closing price. That was a 79% premium. See full story. The deal keeps Wachovia intact, without the need for government support, Chief Executive Robert Steel said. However, Citigroup challenged the deal, arguing that it had exclusive rights which prevent Wachovia talking to other potential acquirers. See full story. While Citigroup offered to pay just $2.16 billion for Wachovia's huge banking business, it's not yet clear which deal is better for Wachovia shareholders. The Citi deal would have left Wachovia with one of the largest retail brokerage business - A.G. Edwards -- and a big asset-management unit called Evergreen. The remaining company would also have valuable tax assets stemming from losses in previous quarters and billions of dollars worth of perpetual preferred stock that it would not need to pay dividends on. After the Citi deal was announced in late September, some analysts speculated that Wachovia's brokerage business may be sold to a larger investment bank, such as Morgan Stanley (MS).
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