The announcement drew some criticism from Wachovia stockholders who felt the dollar-per-share price was too cheap. Some of them planned to try to defeat the deal when it came up for shareholder approval. However, institutional investors such as mutual funds and pension funds controlled 73 percent of Wachovia's stock; individual stockholders would have had to garner a significant amount of support from institutional shareholders to derail the sale. Also, several experts in corporate dealmaking told The Charlotte Observer that such a strategy is very risky since federal regulators helped broker the deal. One financial expert told the Observer that if Wachovia's shareholders voted the deal down, the OCC could have simply seized Wachovia and placed it into the receivership of the FDIC, which would then sell it to Citigroup. Had this happened, Wachovia's shareholders risked being completely wiped out.

Acquisition by Wells Fargo

A bank, converted from Wachovia to Wells Fargo in fall of 2011, in Durham, North Carolina.

Though Citigroup was providing the liquidity that allowed Wachovia to continue to operate, Wells Fargo and Wachovia announced on October 3, 2008, that they had agreed to merge in an all-stock transaction requiring no FDIC involvement, apparently nullifying the Citigroup deal. Wells Fargo announced it had agreed to acquire all of Wachovia for $15.1 billion in stock. Wachovia preferred the Wells Fargo deal because it would be worth more than the Citigroup deal and keep all of its businesses intact. Also, there is far less overlap between the banks, as Wells Fargo is dominant in the West and Midwest compared to the redundant footprint of Wachovia and Citibank along the East Coast and South. Both companies' boards unanimously approved the merger on the night of October 2.
Citigroup explored its legal options and demanded that Wachovia and Wells Fargo cease discussions, claiming that Wells Fargo engaged in "tortious interference" with an exclusivity agreement between Citigroup and Wachovia. That agreement states in part that until October 6, 2008 "Wachovia shall not, and shall not permit any of its subsidiaries or any of its or their respective officers, directors, [...] to [...] take any action to facilitate or encourage the submission of any Acquisition Proposal.".
Citigroup convinced Judge Charles E. Ramos of the New York State Supreme Court to grant a preliminary injunction temporarily blocking the Wells Fargo deal. This ruling was later overturned by Judge James M. McGuire of the New York State Court of Appeals, partly because he believed Ramos did not have the right to rule on the case in Connecticut. On October 9, 2008, Citigroup abandoned its attempt to purchase Wachovia's banking assets, allowing the Wachovia-Wells Fargo merger to go through. However, Citigroup pursued $60 billion in claims, $20 billion in compensatory and $40 billion in punitive damages, against Wachovia and Wells Fargo for alleged violations of the exclusivity agreement. Wells Fargo settled this dispute with Citigroup Inc. for $100 Million on November 19, 2010. Citigroup may have been pressured by regulators to back out of the deal; Bair endorsed Wells Fargo's bid because it removed the FDIC from the picture. Geithner was furious, claiming that the FDIC's reversal would undermine the government's ability to quickly rescue failing banks. However, Geithner's colleagues at the Fed were not willing to take responsibility for selling Wachovia. The Federal Reserve unanimously approved the merger with Wells Fargo on October 12, 2008.
The combined company will be headquartered in San Francisco, home to Wells Fargo. However, Charlotte will be the headquarters for the combined company's East Coast banking operations, and Wachovia Securities will remain in St. Louis. Three members of the Wachovia board will join the Wells Fargo board. It will be the largest bank branch network in the United States.
In filings unsealed two days before the merger approval in a New York federal court, Citigroup argued that its own deal was better for U.S taxpayers and Wachovia shareholders. It said that it had exposed itself to "substantial economic risk" by stating its intent to rescue Wachovia after less than 72 hours of due diligence. Citigroup had obtained an exclusive agreement in order to protect itself. Wachovia suffered a $23.9 billion loss in the third quarter.
In September 2008, the Internal Revenue Service issued a notice providing tax breaks to companies that acquire troubled banks. According to analysts, these tax breaks were worth billions of dollars to Wells Fargo. Vice Chairman Bill Thomas of the Financial Crisis Inquiry Commission indicated that these tax breaks may have been a factor in Wells Fargo's decision to purchase Wachovia. Wells Fargo's purchase of Wachovia closed on December 31, 2008. By the time Wells Fargo completed the acquisition of Wachovia, the byline "A Wells Fargo company" was added to the logo.

Controversies

Michael Serricchio, a broker for Prudential Securities, was called to active duty in the Air Force reserve, but was not offered his old position back after his military stint was over. He sued Wachovia, who had purchased Prudential. A jury found that Wachovia had breached the Uniformed Services Employment and Re-employment Rights Act by intentionally making Serricchio an offer that they knew that he would reject.
 A May 2007 New York Times article described Wachovia's negligence in screening or taking action against companies connected to identity theft. These companies used stolen identities to remove funds from personal Wachovia bank accounts via unsigned checks. The article goes on to say "In all, Wachovia accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records." Furthermore, the article adds "In a lawsuit filed last year, the United States attorney in Philadelphia said Wachovia received thousands of warnings that it was processing fraudulent checks, but ignored them."
On April 25, 2008, Wachovia agreed to pay up to $144 million to end the investigation without admitting wrongdoing. The investigation found that Wachovia had failed to conduct suitable due diligence, and that it would have discovered the thefts if it had followed normal procedures. The penalty is one of the largest ever demanded by the Office of the Comptroller of the Currency.
In April 2008 Wachovia was also investigated by United States federal prosecutors as part of a probe into drug money laundering by Mexican and Colombian money-transferring firms. The investigation of the alleged laundering also included other large U.S. banks. Wells Fargo has since admitted that its Wachovia unit was involved in money laundering for drug traffickers. It allowed money to be transferred in and out of casas de cambio, without proper due diligence, in violation of the Bank Secrecy Act. In March 2010 Wachovia agreed to pay a $160 million dollar fine for involvement in Mexican drug cartel money laundering that could total up to $420 billion dollars. Said Jeffrey Sloman, the chief US prosecutor in the case, "Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations."