Citigroup gets a sweet deal
The United Arab Emirates will soon buy Citigroup shares -- for $31.83 each
That's gotta hurt. The lesson here? Don't ink any deals right before the financial world falls off a cliff.
The UAE thought it was getting a great score in November 2007, according to The Wall Street Journal. Citigroup was in serious money trouble, and the Abu Dhabi Investment Authority (the UAE's sovereign fund) came to the rescue with a $7.5 billion check.
In return, Abu Dhabi agreed to receive an 11% annual dividend for about two years. After that, it would get its investment back in the form of Citigroup stock.
The fatal mistake here was that Abu Dhabi agreed to a stock price of $31.83. That was close to Citigroup's stock price back then, and Abu Dhabi likely figured that shares would grow in value. If that happened, $31.83 looked like a great deal.
"This investment reflects our confidence in Citi's potential to build shareholder value," Abu Dhabi's managing director said at the time, according to the Journal.
So, unless Citigroup shares make a remarkable turnaround, the bank stands to sell its stock to Abu Dhabi at seven times the market price, the Journal reports.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.