Wells Fargo, Citigroup Extend Truce in Wachovia Fray

Wells Fargo & Co. and Citigroup Inc. agreed to extend their truce in the takeover battle for Wachovia Corp., continuing talks with the Federal Reserve to resolve the dispute and heading off a court hearing slated for today.

The ``litigation standstill'' was extended until 8 a.m. New York time on Oct. 10, Wells Fargo and New York-based Citigroup said today in separate statements. The truce began Oct. 6 and was scheduled to expire at noon today.

Wells Fargo and Citigroup are competing for control of Charlotte, North Carolina-based Wachovia's $448 billion of deposits in 21 states. Citigroup offered $2.16 billion last week for the banking operations, and Wells Fargo, based in San Francisco, trumped that by bidding about $15 billion for the whole company. The Federal Reserve is trying to broker a compromise.

``It's going to end up being something in the middle,'' said Chris Armbruster, an analyst at Al Frank Asset Management in Laguna Beach, California, whose $650 million under management includes Citigroup shares.

Wachovia, which was on the verge of being seized last week by the Federal Deposit Insurance Corp., has a limited role in the talks, the people said. While Wachovia is publicly sticking to its signed merger agreement with Wells Fargo, the bank is open to proposals that would get shareholders a better deal, two people briefed on the talks said.

Dividing Wachovia

Wells Fargo may buy Wachovia and sell parts to Citigroup, said one of the people, who declined to be identified because negotiations are private. Citigroup would get branches in the Northeast and about a quarter of Wachovia's deposits. Wells Fargo would take the branches in the South and Mid-Atlantic states, the person said.

Wachovia rose 7 cents, or 1.3 percent, to $5.32 in composite trading on the New York Stock Exchange at 1:29 p.m. Citigroup fell 60 cents to $14.55, and Wells Fargo gained $1.15 to $31.75.

U.S. District Judge Lewis Kaplan in Manhattan postponed a hearing scheduled for 3:30 p.m. today on a suit by Wachovia seeking to have the deal with Wells Fargo declared valid.