Exhibit 99(a)
[FIRST UNION LOGO]
Tuesday Media Contact:
May 15, 2001 Ginny Mackin 704-383-3715
Mary Eshet 704-383-7777
Investor Contact:
Alice Lehman 704-374-4139
FIRST UNION'S DEAL MOST COMPELLING FOR SHAREHOLDERS
FOR LONG TERM
CHARLOTTE, N.C. -- First Union [NYSE: FTU] today reiterated its resolute
commitment to pursue a merger of equals with Wachovia Corporation. The companies
announced on April 16, 2001, their intention to create the nation's fourth
largest financial institution. First Union reconfirmed that the terms of the
transaction will remain at 2 First Union shares for each Wachovia [NYSE: WB]
share, with a special $0.48 per share dividend to Wachovia shareholders.
"After reviewing SunTrust's [NYSE: STI] unsolicited proposal, we remain firmly
convinced that our proposed merger is clearly superior for Wachovia's
shareholders," said Ken Thompson, First Union chairman and CEO.
He noted the scale of the merged company's businesses in conjunction with the
significant geographic overlap in retail banking provide unparalleled
opportunities to generate cost savings in a customer-friendly manner.
Based on Monday's closing stock prices, SunTrust's hostile offer represents
merely a 5% premium to First Union's merger agreement with Wachovia, Thompson
said. "This modest premium would not even begin to compensate Wachovia's
shareholders for the tremendous integration risk that arises in the unsolicited
SunTrust proposal," he added.
Despite significant industry consolidation over the past decade, according to
Thompson, there have been no successful hostile acquisitions of large U.S.
banks. "Hostile bids in the banking industry have a terrible track record, and
are clearly disruptive to shareholders, employees and customers," said Thompson.
First Union believes its merger of equals transaction is clearly superior to
SunTrust's unsolicited offer on several critical dimensions:
o Creates significantly greater earnings per share (EPS) accretion to Wachovia
shareholders;
o Delivers a substantially higher internal rate of return to Wachovia
shareholders; and
o Provides Wachovia shareholders greater cost synergies with much lower
integration risk.
First Union made additional key points supporting the First Union/Wachovia
merger, including:
o Cumulative dividend payments to Wachovia shareholders through 2004 will be
identical on a present value basis under each proposal; and
o Significantly greater excess capital is generated from First Union's
agreement, with one-time costs related to SunTrust's proposal (after-tax
restructuring charge, option payment, dividend increase) offsetting any
potential for net capital creation from cost savings for more than 10
years.
Additionally, Thompson noted that for First Union shareholders, the merger of
equals with Wachovia significantly enhances shareholder value through
substantial earnings per share accretion and an internal rate of return in
excess of 20 percent. For SunTrust shareholders, their hostile proposal for
Wachovia dilutes new GAAP earnings per share in each of the next three years and
provides a significantly lower return on investment (13%+) to SunTrust's
shareholders.
First Union (NYSE:FTU), with $253 billion in assets and stockholders' equity of
$16 billion at March 31, 2001, is a leading provider of financial services to 15
million retail and corporate customers throughout the East Coast and the nation.
The company operates full-service banking offices in 11 East Coast states and
Washington, D.C., and full-service brokerage offices in 47 states and
internationally. Online banking products and services can be accessed through
www.firstunion.com.
First Union/Wachovia Merger
Significantly More Compelling Financially to Shareholders
Differential in Current Proposals:
(based on closing price as of May 14, 2001) FTU/WB STI
Merger of Equals Hostile Offer
------------------- --------------
Per WB Share $61.64(a) $64.86
Offer Value Differential 4.96%
o Significantly greater EPS accretion for WB shareholders:
Advantage
FTU/WB STI to First Union
Merger of Equals(b) Hostile Offer(c) Proposal
------------------- --------------- -------------
Impact to WB EPS
New GAAP (d)
2002 9% (9)% 18%
2003 13 (3) 16
2004 17 3 14
Cash EPS 2004 20% 9% 11%
o Substantially higher internal rate of return:
IRR to WB shareholders 21%+(b) 15%-17% (e) 4%-6%
o Capacity to provide identical dividend payments with a substantially lower
payout ratio:
Cumulative Dividend Payments
To WB Shareholders
Through 2004(f) $6.82 $6.82 $0.00
o Substantial accretion to First Union shareholders relative to STI
shareholders:
New GAAP EPS Impact Cash EPS Impact
--------------------------- ---------------------------
FTU(b) STI(c, d) FTU(b) STI(c)
-------- ----------- -------- ---------
2002 0% (10)% 4% 0%
2003 3% (4)% 5% 3%
2004 5% (2)% 7% 6%
(a) Includes special one-time dividend of $0.48 per Wachovia share.
(b) First Union investor presentation on April 16, 2001.
(c) SunTrust presentation on May 14, 2001, assuming a $780 million option
payment.
(d) Assumes core deposit intangible amortization of $273 million, $232 million
and $191 million, respectively, in 2002, 2003 and 2004.
(e) Based on recalculation of SunTrust data included in May 14, 2001,
presentation, adjusting announced IRR to SunTrust's shareholders by initial
premium offered.
(f) Assumes FTU/WB projected dividend payout ratio of 34% in 2002, 2003 and
2004. Assumes STI/WB projected dividend payout ratio of 40% in 2003 and
2004. Dividend streams present valued at a 13% discount rate.
First Union's Deal Most Compelling/Page 4
This press release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without
limitation, (i) statements about the benefits of the merger between First Union
Corporation and Wachovia Corporation, including future financial and operating
results, cost savings, enhanced revenues, and accretion to reported earnings
that may be realized from the merger; (ii) statements with respect to First
Union's plans, objectives, expectations and intentions and other statements that
are not historical facts; and (iii) other statements identified by words such as
"believes", "expects", "anticipates", "estimates", "intends", "plans",
"targets", "projects" and similar expressions. These statements are based upon
the current beliefs and expectations of First Union's management and are subject
to significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from the anticipated results or other expectations expressed in the
forward-looking statements: (1) the risk that the businesses of First Union and
Wachovia will not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; (2) expected revenue
synergies and cost savings from the merger may not be fully realized or realized
within the expected time frame; (3) revenues following the merger may be lower
than expected; (4) deposit attrition, operating costs, customer loss and
business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than
expected; (5) the ability to obtain governmental approvals of the merger on the
proposed terms and schedule; (6) the failure of First Union's and Wachovia's
stockholders to approve the merger; (7) competitive pressures among depository
and other financial institutions may increase significantly and have an effect
on pricing, spending, third-party relationships and revenues; (8) the strength
of the United States economy in general and the strength of the local economies
in which the combined company will conduct operations may be different than
expected resulting in, among other things, a deterioration in credit quality or
a reduced demand for credit, including the resultant effect on the combined
company's loan portfolio and allowance for loan losses; (9) changes in the U.S.
and foreign legal and regulatory framework; and (10) adverse conditions in the
stock market, the public debt market and other capital markets (including
changes in interest rate conditions) and the impact of such conditions on the
combined company's capital markets and asset management activities. Additional
factors that could cause First Union's results to differ materially from those
described in the forward-looking statements can be found in First Union's
reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K) filed with the Securities and Exchange Commission
and available at the SEC's Internet site (http://www.sec.gov). All subsequent
written and oral forward-looking statements concerning the proposed transaction
or other matters attributable to First Union or any person acting on its behalf
are expressly qualified in their entirety by the cautionary statements above.
First Union does not undertake any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the date the
forward-looking statements are made.
Additional Information
The proposed transaction will be submitted to First Union's and Wachovia's
stockholders for their consideration, and, on April 26, 2001, First Union filed
a registration statement on Form S-4 with the SEC containing a preliminary joint
proxy statement/prospectus of First Union and Wachovia and other relevant
documents concerning the proposed transaction. Stockholders are urged to read
the definitive joint proxy statement/prospectus when it becomes available and
any other relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important information.
You will be able to obtain a free copy of the registration statement and the
joint proxy statement/prospectus, as well as other filings containing
information about First Union and Wachovia, at the SEC's Internet site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, by directing a
request to First Union, Investor Relations, One First Union Center, Charlotte,
North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations,
100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397).
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First Union's Deal Most Compelling/Page 5
First Union and Wachovia, and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
stockholders of First Union and Wachovia in connection with the merger.
Information about the directors and executive officers of First Union and their
ownership of First Union common stock is set forth in First Union's proxy
statement on Schedule 14A, as filed with the SEC on March 13, 2001. Information
about the directors and executive officers of Wachovia and their ownership of
Wachovia common stock is set forth in Wachovia's proxy statement on Schedule
14A, as filed with the SEC on March 19, 2001. Additional information regarding
the interests of those participants may be obtained by reading the definitive
joint proxy statement/prospectus regarding the proposed transaction when it
becomes available.