by Calculated Risk on 10/03/2008 11:02:00 AM

From Bloomberg: Citigroup Demands Wachovia, Wells Fargo Terminate Merger Deal

Citigroup Inc. demanded that Wells Fargo & Co. and Wachovia Corp. terminate a $15.1 billion takeover agreement announced today, saying it breached an exclusive deal the New York-based company reached earlier this week.
...
``Citi has substantial legal rights regarding Wachovia and this transaction,'' the New York-based company said in a statement. ``Wachovia's agreement to a transaction with Wells Fargo is in clear breach of an exclusivity agreement between Citi and Wachovia.''

From the FDIC: FDIC Chairman Sheila Bair Comments on Agreement to Merge by Wells Fargo and Wachovia

"Since the close of our bidding process, Wells has apparently re-assessed its position and come forth with this new offer that does not require FDIC assistance. ...

"The FDIC stands behind its previously announced agreement with Citigroup. The FDIC will be reviewing all proposals and working with the primary regulators of all three institutions to pursue a resolution that serves the public interest."

The Wells Fargo deal seems to make more sense, and appears better for Wachovia stakeholders and U.S. taxpayers. Maybe there will be some sort of breakup fee for Citi.