Wac(hovia + Citi – Citi) + Wells Fargo

This mornings news is that Wachovia is now being merged with Wells Fargo for an approximate price of 7$ in an all stock swap where each shreholder gets about 0.19 share of Wells Fargo in exchange for each share of Wachovia.

Here is what I think is happening. How do you get someone to accept a bad deal? By presenting another option that is so bad that the bad deal looks good. In this case the other really really bad option was the Wachovia-Citi-Fed deal and that was presented to us so that we accept this other bad deal by Wells Fargo. I say Wachovia shouldn’t settle for anything less than 10$