Citigroup said it had been granted “emergency injunctive relief” from the Supreme Court of the State of New York to extend the exclusivity agreement governing its $2.1bn takeover bid.
Wachovia and Wells Fargo denied the court order had any effect on their agreement, which Wells called “firm” and “binding”.
The fight comes after the bank’s board agreed to a takeover by Wells Fargo on Thursday, three days after Citigroup appeared to have agreed its own government-assisted deal with the company.
Citigroup moved to block the merger, claiming it had “legal rights” and had been giving Wachovia liquidity support throughout the week.Wachovia had committed not to negotiate with other parties until tomorrow at the earliest.
Citigroup reportedly offered to significantly increase its bid, but that was rejected, according to the Wall Street Journal.
The legal battle comes at what some commentators suggest is the worst possible time for the US government.
While its $700bn bank bail-out was pushed through Congress on Friday, it is still relying on America’s biggest remaining banks, including Citigroup and Wells Fargo, to support its plans and provide liquidity.
On attaining the court ruling, which Wachovia had tried to block, Citigroup said it would “continue negotiations with Wachovia on the previously agreed-to transaction”.
Wachovia and Citigroup have been ordered to appear before the New York court on Friday.
