Wachovia: Citi’s loss, Buffett’s gain

[dkf]

Wells Fargo’s (WFC) plan to buy Wachovia (WB) for $15 billion in stock is weighing on Citi (C). Citi shares dropped 10% in premarket trading Friday, giving back the gains they made over the past week after the financial services giant reached a deal to buy Wachovia’s banking operations in a deal backed by the Federal Deposit Insurance Corp. Buying Wachovia would have given Citi a much bigger branch network and added substantially to its deposit base, at the cost of just $2 billion in stock and $12 billion in preferred shares issued to the FDIC.

But now, those benefits will accrue to Wells, the San Francisco bank whose biggest shareholder is Warren Buffett’s Berkshire Hathaway. The Wells-Wachovia deal looks like another win for Berkshire which, like Wells, ranks among the few financial-related stocks to be up in a year that has seen the collapse of the U.S. brokerage sector and steep declines in shares of many banks. Just over the past month, Berkshire has taken big preferred stakes in Goldman Sachs (GS) and GE (GE) at very favorable terms, and agreed to buy energy merchant Constellation Energy at a third of its recent high.

http://dailybriefing.blogs.fortune.cnn.com/2008/10/03/wachovia-citis-loss-buffetts-gain/?source=yahoo_quote

[mmonk]

1. I was hoping someone would step in and offer

more. I like the news.