SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the commission only (as permitted by Rule
14a-6(e)(2)).
[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[X] Soliciting material under Rule 14a-12.
Wachovia Corporation
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Date: May 23, 2001
This filing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, (i) statements about the benefits of the merger between
Wachovia Corporation and First Union 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
Wachovia's and 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 Wachovia's and
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 Wachovia's and First Union'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 Wachovia's and First Union's results to differ
materially from those described in the forward-looking statements can be found
in Wachovia's and 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 Wachovia or
First Union or any person acting on their behalf are expressly qualified in
their entirety by the cautionary statements above. Wachovia and First Union do
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.
The proposed transaction will be submitted to Wachovia's and First Union'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 Wachovia and First Union 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 Wachovia and First Union, 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 Wachovia, Investor Relations, 100 North Main Street, Winston-Salem,
North Carolina 27150 (888-492-6397), or to First Union, Investor Relations, One
First Union Center, Charlotte, North Carolina 28288-0206 (704-374-6782).
Wachovia and First Union, and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
stockholders of Wachovia and First Union in connection with the merger.
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. 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. 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.
PRESS RELEASE ISSUED BY WACHOVIA CORPORATION ANNOUNCING WACHOVIA
CORPORATION'S BOARD OF DIRECTORS REJECTION OF SUNTRUST BANKS, INC.'S
PROPOSAL
TRANSCRIPT OF VIDEO MESSAGE PRESENTED BY WACHOVIA CHAIRMAN AND CEO L.M.
BAKER, JR. DISCUSSING REJECTION OF SUNTRUST BANKS, INC. PROPOSAL
LETTER FROM WACHOVIA CORPORATION'S BOARD OF DIRECTORS TO SUNTRUST
BANKS, INC.'S BOARD OF DIRECTORS REJECTING SUNTRUST'S UNSOLICITED
ACQUISITION PROPOSAL
LETTER FROM L.M. BAKER, JR. TO WACHOVIA CORPORATION'S SHAREHOLDERS
ANNOUNCING WACHOVIA'S REJECTION OF SUNTRUST BANKS, INC.'S PROPOSAL
INTERNAL MEMO TO WACHOVIA CORPORATION'S SENIOR MANAGERS EXPLAINING THE
DECISION TO REJECT SUNTRUST BANKS, INC'S PROPOSAL
PRESS RELEASE ISSUED BY WACHOVIA CORPORATION REQUESTING SUNTRUST BANKS,
INC.'S BOARD OF DIRECTORS ABANDON ITS HOSTILE TAKEOVER PROPOSAL.
TRANSCRIPT OF VOICE MAIL MESSAGE DELIVERED TO ALL WACHOVIA EMPLOYEES ON
MAY 23, 2001 EXPLAINING WACHOVIA CORPORATION'S BOARD OF DIRECTORS
DECISION TO REJECT SUNTRUST BANKS, INC.'S UNSOLICITED ACQUISITION
PROPOSAL
PRESS RELEASE ISSUED BY WACHOVIA CORPORATION ANNOUNCING WACHOVIA CORPORATION'S
BOARD OF DIRECTORS REJECTION OF SUNTRUST BANKS, INC.'S PROPOSAL
For Additional Information:
Ed L. Hutchins, 336-732-4200
ed.hutchins@wachovia.com
May 22, 2001
Wachovia Board Rejects SunTrust's Hostile Offer
-----------------------------------------------
SunTrust Proposal Considered Financially and Strategically Unattractive
Board Reaffirms Commitment to Merger of Equals With First Union
That Will Create the "New Wachovia"
First Union Merger Agreement Amended to Provide Wachovia Shareholders
Choice on Dividend
WINSTON-SALEM, N.C. -- Wachovia Corporation (NYSE: WB) today announced
that its board of directors has voted to reject the hostile acquisition proposal
from SunTrust Banks Inc. (NYSE: STI) and has reaffirmed its commitment to the
planned merger of equals with First Union Corporation (NYSE: FTU).
Wachovia's board also voted today to amend the merger agreement with
First Union to provide Wachovia shareholders a new dividend choice. Once the
Wachovia/First Union merger is completed, all Wachovia shareholders will have
the option to choose either:
|X| an ongoing cash dividend payment equal to Wachovia's current $2.40 per
share annual rate until the new Wachovia's dividend payment meets or
exceeds that rate per existing Wachovia share, or
|X| a special cash payment of $0.48 per existing Wachovia share at closing,
plus the regular new Wachovia dividend to be set initially at an
anticipated annual rate of $1.92 per existing Wachovia share.
In a letter to shareholders, L.M. Baker Jr., Wachovia chairman and
chief executive officer, detailed four primary points regarding SunTrust's
hostile proposal: A combined SunTrust/Wachovia will not provide adequate future
earnings growth.
|X| SunTrust has produced lackluster growth over the past two years.
|X| During the first quarter, SunTrust's core earnings per share declined
relative to core EPS in both the 1st and 4th quarters of 2000.
|X| SunTrust's inability to grow in important business lines such as trust
and asset management, retail brokerage, and select capital markets
businesses raises concerns about its operating strategies and ability
to sustain core earnings growth.
|X| SunTrust's deteriorating Tier 1 capital ratio calls into question its
ability to continue to use aggressive share repurchases as a primary
driver of EPS growth.
|X| A combination with SunTrust could act as a drag on Wachovia's expected
future earnings growth.
There is serious implementation risk in the SunTrust proposal.
|X| SunTrust is very inexperienced in integration activities, having
completed only one transaction with a value greater than $100 million
in the past 10 years. The Wachovia transaction is three times larger
than any integration attempted to date and is twice as large as the
combined assets of all acquisitions completed in the last 10 years.
|X| The cost savings currently promised by SunTrust are significantly
greater than those we jointly estimated in December and, in SunTrust's
own view at that time, are unrealistically high.
|X| These cost savings could be achieved only through actions that would
slow the combined company's growth, hinder lines of business and lessen
service quality.
|X| SunTrust projects minimal accretion to earnings per share and, in our
view, long-term EPS dilution is more likely.
SunTrust's proposal does not compensate Wachovia shareholders for SunTrust's
inadequate future earnings growth and serious implementation risk.
|X| SunTrust's asserted 17% premium to the First Union merger agreement fell to
just 5% by the end of the trading day on which it was announced. Clearly
SunTrust's stock price cannot support an aggressive hostile transaction.
There is no dividend advantage to SunTrust's hostile proposal.
|X| The original agreement provided a special dividend to Wachovia
shareholders equal to the expected present value difference between the
Wachovia and First Union dividends.
|X| Wachovia shareholders now can choose instead to continue to receive an
ongoing cash dividend payment equal to a minimum of Wachovia's current
$2.40 per share under the amended merger agreement with First Union.
"We looked long and hard, and on multiple occasions, at a combination
with SunTrust and concluded it would not work," Baker said. "These discussions
validated the belief that our companies have certain common values around
customers, employees and shareholders. However, each time the discussions broke
off due to the inability to translate those values into working business
strategies and operating models. Five months after our discussions broke down,
SunTrust is back with a less appealing, hostile proposal to take over Wachovia,
and our conclusion is the same: it will not work.
"In merging with First Union, Wachovia will create a premier,
pace-setting financial institution that is well positioned to meet the
challenges and opportunities of the future. In our merger of equals, Wachovia
and First Union each bring distinctive strengths that complement the other.
First Union has invested heavily in technology and has a wide breadth of
products and services. Wachovia has earned national acclaim for its high
standard of customer service and long-term relationships. By blending these
strengths, the new Wachovia will create the leading financial service company on
the East Coast, with an excellent platform for delivering superior long-term
performance. Together, we have the opportunity to achieve unusually attractive
growth in future years. For shareholders, the upside is substantial with
immediate earnings accretion and potential for price-earnings multiple
expansion. We are enthusiastic about the new Wachovia. We are off to an
excellent start.
"SunTrust has not invested heavily for the future. As compared with
either Wachovia or First Union, it does not have the management depth or
operational experience or the breadth of product and service offerings that are
needed in today's environment to compete on a larger scale. Nor do we believe
that there is the right strategic or operational fit between our two companies.
"We look forward to continuing to serve the best interests of
Wachovia's shareholders, customers, employees and communities as we proceed with
the creation of the new Wachovia. We remain confident in our vision and firmly
committed to its effective execution."
On April 16, 2001, Wachovia announced a merger of equals with First
Union Corporation.
The investor presentation will be available on www.wachovia.com. The
text of Baker's letter to shareholders follows.
May 22, 2001
Dear fellow Wachovia shareholder:
Last week, SunTrust Banks, Inc. made an unsolicited proposal to acquire
Wachovia Corporation. This afternoon, Wachovia's board of directors
voted to reject SunTrust's proposal and reaffirmed its commitment to
the planned merger of equals with First Union Corporation that was
proposed to shareholders last month.
The integration planning for the two companies is proceeding extremely
well, reinforcing our excitement over the strong prospects for this
combination. We see nothing in the SunTrust proposal to suggest that we
should reconsider the First Union merger, which we firmly believe to be
in the best interest of Wachovia, its shareholders, employees,
customers and the communities we serve. Specifically:
o We believe a combined SunTrust/Wachovia would grow more slowly and
be less profitable than a combined Wachovia/First Union or, for
that matter, Wachovia alone.
o We believe there are insurmountable strategic and operational
obstacles to combining SunTrust and Wachovia.
o We believe that even if Wachovia were seeking to sell itself,
which it is not, the potential returns to Wachovia shareholders
from a hostile acquisition by SunTrust are unattractive.
There has been a great deal of speculation and inaccurate and
misleading information in the media recently about Wachovia, First
Union and SunTrust. Before going into detail on the SunTrust proposal,
please allow us to set the record straight.
Wachovia conducted an intensive review of its business strategy last
year. That review reaffirmed our belief that the greatest potential for
future growth and profitability lies in non-traditional banking
businesses (such as securities brokerage, capital markets, insurance
and wealth management) and in non-traditional approaches to traditional
businesses (such as our integrated approach to customer relationship
management). Over a two-day period in March, we described Wachovia's
business strategies to investors. Their response was favorable.
During our review, we considered whether merging with another financial
institution would help us achieve our goals. We knew that partnering
with the wrong financial institution would be detrimental to
shareholder value. By contrast, we determined that a partnership that
broadens our product lines and distribution and enhances market
leadership could be advantageous. For several years, we had
contemplated the possible advantages of a Wachovia/First Union merger
to achieve these objectives. And when Ken Thompson, First Union's new
chief executive officer, laid out his company's business strategies
last summer it was clear they were remarkably similar to our own.
At the time, First Union was emerging from a period of some
difficulties, mainly arising from two past acquisitions. It was clear
that we could not contemplate a merger until Ken Thompson and his new
management team had gotten the company clearly on track. When talks
with First Union began in earnest in April, an intensive examination of
its businesses showed the revitalization of the company and a genuine
turnaround. The performance of First Union's shares this year suggests
that investors agree with our conclusion.
The proposed merger of equals with First Union is compelling. It is
built on a genuine sharing of strengths and a cooperative determination
of business strategies and practices. For shareholders, the upside is
substantial earnings accretion from the outset and potential
price-earnings multiple expansion in the future. As our management
teams have met over this past month to develop business unit
strategies, it has been exciting to see the early results of their
collaboration. The potential for growth and high performance seems even
stronger.
We have not seen this unique potential in our discussions with
SunTrust. Managers from both of our companies have discussed partnering
several times over the past decade. These discussions showed that our
companies have certain common values around customers, employees and
shareholders. However, each time the discussions broke off due to the
inability to translate those values into working business strategies
and operating models. Time after time, our discussions with SunTrust
culminated in the conclusion that these companies could not be combined
in a way that realized
either the core potential we see in our own businesses or the enhanced
potential we would seek for Wachovia shareholders in a merger partner.
Our discussions in December of last year constituted an intense attempt
to find a way to combine our two institutions and again ended without a
completed transaction. One after another, Wachovia's senior managers
came back from discussions with their counterparts at SunTrust to
report that they did not believe the two operations could be combined
productively. We concluded that even with me serving as CEO of a
combined SunTrust/Wachovia for two years, maintaining the Wachovia name
and Wachovia directors filling half the board, the divergent strategies
for future growth could not be reconciled.
That was the point at which we ended discussions in December. The
structural issues around our asset management businesses referred to by
SunTrust were not, in fact, the only reason for breaking off
discussions; rather, they were symbolic of much broader issues.
Wachovia has spent five years developing a high-growth,
high-profitability model for our wealth and asset management business.
We were unable to understand SunTrust's insistence that we return to a
lower-performance model previously discarded by Wachovia. That kind of
refusal to explore alternatives was endemic to our discussions
regarding other primary business issues as well.
Now we want to discuss four key points about SunTrust's hostile
proposal.
A combined SunTrust/Wachovia will not provide adequate future earnings
growth. At a time when Wachovia and First Union are embracing a
non-traditional approach to banking, SunTrust remains a traditional
bank, and a combined SunTrust/Wachovia is merely a bigger traditional
bank. SunTrust has now produced lackluster growth over the past two
years. Our examination of SunTrust's businesses leads us to question
its ability to reverse this stagnation.
We are concerned about SunTrust's inability to grow important business
lines, such as trust and asset management, and ultimately to sustain
core earnings growth. The deterioration in SunTrust's core earnings in
the quarter ending March 31, while not a surprise to us, is
particularly disconcerting. In that report, SunTrust's profit margins
clearly came under pressure, fee income was stagnant, and earnings per
share growth was dependent on one-time securities transactions, cost
reductions and share repurchases. For all these reasons, we believe
that a combination with SunTrust would act as a drag on Wachovia's
expected future earnings growth.
There is serious implementation risk in the SunTrust proposal. SunTrust
is very inexperienced in integration activities, having completed only
one transaction with a value greater than $100 million in the past 10
years. The Wachovia transaction is three times larger than any
integration attempted to date by SunTrust and is twice as large as the
combined assets of all its acquisitions completed in the last 10 years.
The fundamental strategic differences already described are, we
believe, crippling to the success of any future combination. But even
if they could be overcome, the cost savings promised by SunTrust are
significantly greater than those we jointly estimated in our December
discussions. In our view (and in SunTrust's own view last December),
these new cost savings numbers are unrealistically high. They could be
achieved only through actions that would slow the combined company's
growth, hinder lines of business, and lessen service quality. Even if
the promised cost savings were achieved, SunTrust projects minimal
accretion to earnings per share. If our view of the integration issues
is correct, long-term earnings per share dilution would be a more
likely outcome. Even when using SunTrust's aggressive assumptions, we
expect the Wachovia/First Union merger to be approximately twice as
accretive as the SunTrust proposal.
SunTrust's proposal does not compensate Wachovia shareholders for
SunTrust's inadequate future earnings growth and serious implementation
risk. SunTrust is proposing a hostile transaction that is less
attractive in many ways than the combination we considered last
December. By the end of the day it was announced, the asserted 17%
premium to the First Union merger agreement fell to just 5%. Clearly
the SunTrust stock price cannot support an aggressive hostile
transaction.
There is no dividend advantage to SunTrust's hostile proposal. The
amended merger agreement with First Union provides Wachovia
shareholders the ability to continue to receive their existing annual
dividend payment of $2.40 per share. Once the Wachovia/First Union
merger is completed, all Wachovia shareholders will have the option to
choose either:
o an ongoing cash dividend payment equal to Wachovia's current $2.40
per share annual rate until the new Wachovia's dividend payment
meets or exceeds that rate per existing Wachovia share, or
o a special cash payment of $0.48 per existing Wachovia share at
closing, plus the regular new Wachovia dividend to be set
initially at an anticipated annual rate of $1.92 per existing
Wachovia share.
Future dividends are going to depend on the growth of the combined
company, and we are convinced that the new Wachovia can grow its
dividends more rapidly than SunTrust.
The bottom line is: our merger of equals with First Union is a
thoughtful, responsible strategic combination. It is off to an
excellent start. We have looked long and hard, and on multiple
occasions, at a merger with SunTrust, and concluded it just would not
work. Five months after our last discussions broke down, SunTrust is
back with a less appealing hostile proposal to take over Wachovia, and
our conclusion is the same: it will not work.
We reject SunTrust's hostile takeover bid and we remain fully committed
to our merger with First Union.
We firmly believe that when you consider our reasons, you will support
this decision. We will be sending you detailed information in the
coming weeks about the new Wachovia and asking for your support.
On Behalf of Your Board of Directors
Sincerely,
L.M. Baker, Jr.
Chairman and Chief Executive Officer
Wachovia Corporation, with dual headquarters in Atlanta and
Winston-Salem, N.C., is a leading financial holding company serving regional,
national and international markets. As of March 31, 2001, Wachovia had assets of
$75.6 billion. Member companies offer consumer and commercial banking, bank
card, asset and wealth management, capital markets and investment banking,
community development finance, brokerage and insurance services. Wachovia Bank,
N.A., the principal subsidiary, has nearly 650 offices and 1,350 ATMs primarily
in Florida, Georgia, North Carolina, South Carolina and Virginia.
This news release contains 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 and
Wachovia'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" and similar expressions. These statements are based upon the current
beliefs and expectations of First Union's and Wachovia'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 such
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 and Wachovia's results to differ
materially from those described in the forward-looking statements can be found
in First Union's and Wachovia's 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. All subsequent written and oral forward-looking statements
concerning the proposed transaction or other matters and attributable to First
Union or Wachovia or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements referenced above. First Union and
Wachovia do 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:
You are urged to read the definitive joint proxy statement/prospectus regarding
the proposed merger between First Union and Wachovia when it becomes available,
because it will contain important information. You may obtain a free copy of the
preliminary joint proxy statement/prospectus filed as part of First Union's
registration statement on Form S-4, and other filings containing information
about First Union and Wachovia, including the definitive joint proxy
statement/prospectus when it becomes available, without charge, 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 also can be obtained, without charge, by
directing a request to First Union Corporation, Investor Relations, One First
Union Center, 301 South College Street, Charlotte, NC 28288-0206, 704-374-6782,
or to Wachovia Corporation, Investor Relations, 100 North Main Street,
Winston-Salem, NC 27150, 888-492-6397. Information regarding the participants in
the proxy solicitation and a description of their direct and indirect interest,
by security holdings or otherwise, is contained in the materials filed with the
SEC by each of First Union and Wachovia on April 16, 2001.
TRANSCRIPT OF VIDEO MESSAGE PRESENTED BY WACHOVIA CHAIRMAN AND CEO L.M. BAKER,
JR. DISCUSSING REJECTION OF SUNTRUST BANKS, INC. PROPOSAL
L.M "Bud" Baker
Chairman & CEO
Wachovia Corporation
SOUNDBITE ONE:
On a number of occasions, we have had the opportunity to talk to SunTrust, about
possible strategic combinations. We have never been able to make a combination
with SunTrust work, and we have been trying for some considerable period of
time.
SOUNDBITE TWO:
We are diametrically, absolutely, the opposite case, when we look at how we go
to customers, how we think about the organization of our lines of business, in
our approach to customers, how we think about rewarding our people and
recognizing their performance, our financial controls, our risk management
systems, doesn't mean that they're wrong or we're wrong, it just means that we
are radically different and if you're going to compete in the kind of world we
see out there today, you have to have your strategies in place, lined up, and in
agreement, so that your people know where you're going, and you have to be able
to move forward forcefully with those stragties. We were unable in December to
achieve that kind of agreement, on the basic organization of the company with
SunTrust. We were unable to get SunTrust to recognize the importance of key
lines of business, relating to Wachovia, quite frankly we were unable to get the
officers of SunTrust to engage in any meaningful discussion, about the kind of
differences that we might have in organizational structure. And so we could not
find the satisfaction we needed to be able to understand that Wachovia and
SunTrust could possibly come together, in a combination that would ultimately
create great value for our shareholders. And that raised the possibility, the
very dangerous possibility, that a merger between Wachovia and Sun Trust which
is not clearly thought through, could produce in fact earnings delusion for our
shareholders and ultimate loss of value.
SOUNDBITE THREE:
The question is can the share price of SunTrust be maintained in the face of the
very difficult integration process they would have in a hostile and aggressive
takeover of a company that does not wish to be bought. And so it is not a
compelling offer, it is simply made, I believe, in the opportunistic hope that
they can someone how upset the First Union transaction and somehow achieve some
sort of victory over Wachovia.
SOUNDBITE FOUR:
But the real issue is when you look at the final company, when you look at the
merger of equals, between Wachovia and First Union, and to see the incredible
power of this company in the market place and our ability to serve customers in
an extraordinary way and to bring exceptional value to shareholders.
SOUNDBITE FIVE:
There is absolute agreement between Ken Thompson, the CEO of First Union, and
myself and our senior officers, about our objectives in the future. Our
objectives are to serve the interest of our shareholders, to serve our costumers
in an extraordinary manner, and to serve the communities in which we live and in
which we have prospered over time. I think these are meaningful goals and they
are absolute aspirations of the new company.
LETTER FROM WACHOVIA CORPORATION'S BOARD OF DIRECTORS TO SUNTRUST BANKS, INC.'S
BOARD OF DIRECTORS REJECTING SUNTRUST'S UNSOLICITED ACQUISITION PROPOSAL
May 22, 2001
The Board of Directors
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Dear Members of the Board:
We were disappointed to receive the unsolicited proposal from SunTrust that was
delivered to the Wachovia board from Mr. Humann on May 14, 2001. Please be
assured that our board of directors entered into the agreement with First Union
after a careful review of all of Wachovia's strategic options, including the
possibility of exploring further discussions with SunTrust. These options were
thoroughly examined and we remain confident in our chosen strategy. Indeed,
SunTrust's recent negative advertisements, press strategy and hostile conduct
further buttress our prior conclusions as to the incompatibility of SunTrust and
Wachovia as merger partners.
As we are sure you are aware, Wachovia's board has a long and thorough knowledge
of your company. In the fall of 1997 and again in the late fall of 2000,
extensive due diligence was undertaken by both organizations in a good faith
effort to ascertain the long-term benefits to our shareholders of merging our
organizations.
In January of this year, Wachovia's board reviewed very carefully its strategic
options, including yet again a review of a possible merger with SunTrust. With
our knowledge of your organization and its operations, the financial
considerations and other important issues we must consider in the exercise of
our business judgment, the board concluded that a combination of our
institutions would not be advantageous to Wachovia's shareholders.
On April 15, the Wachovia board approved and entered into a merger agreement
with First Union. The Wachovia board of directors met again today to review the
unsolicited proposal you publicly announced last week to acquire Wachovia. After
giving it careful and objective consideration and with the advice of our
financial and legal advisors, our board once again strongly reaffirmed its
commitment to our strategic merger with First Union.
Our firmly held view is that a combination with SunTrust is simply the wrong
transaction for Wachovia, its shareholders and other key constituencies. Our
reasons for reaching this conclusion are set forth in greater detail in a letter
we are sending to our shareholders (a copy of which is attached).
We hope that you will respect our decision and ask that you abandon your current
strategy. We acted in good faith last fall when we mutually explored a possible
SunTrust/Wachovia transaction - a concept we have each explored on numerous
occasions to no avail. We agreed with the decision to terminate discussions
following the unanimous determination of our senior management team that a
SunTrust transaction was not in Wachovia's best interests.
A continuation of your current efforts is not in anyone's interest. The Wachovia
board is committed to the First Union transaction, and we are confident that it
will receive the support of our shareholders. Continued efforts on SunTrust's
part will be expensive, time-consuming and disruptive to the customers and
employees of both of our organizations and distracting to our respective
management teams. SunTrust lost $1.4 billion, or 7.4% of its total shareholder
value, on the day of announcement. Further hostile actions will not serve
SunTrust's or Wachovia's best interests.
We sincerely urge you to respect our decision and to withdraw. We think we will
both serve our shareholders, customers, employees and communities best by
competing in the banking business.
On Behalf of the Board of Directors
Sincerely,
L. M. Baker, Jr., Chairman, President
and Chief Executive Officer
LETTER FROM L.M. BAKER, JR. TO WACHOVIA CORPORATION'S SHAREHOLDERS ANNOUNCING
WACHOVIA'S REJECTION OF SUNTRUST BANKS, INC.'S PROPOSAL
May 22, 2001
Dear Fellow Wachovia Shareholder:
Last week, SunTrust Banks, Inc. made an unsolicited proposal to acquire Wachovia
Corporation. This afternoon, Wachovia's board of directors voted to reject
SunTrust's proposal and reaffirmed its commitment to the planned merger of
equals with First Union Corporation that was proposed to shareholders last
month.
The integration planning for the two companies is proceeding extremely well,
reinforcing our excitement over the strong prospects for this combination. We
see nothing in the SunTrust proposal to suggest that we should reconsider the
First Union merger, which we firmly believe to be in the best interest of
Wachovia, its shareholders, employees, customers and the communities we serve.
Specifically:
o We believe a combined SunTrust/Wachovia would grow more slowly and be
less profitable than a combined Wachovia/First Union or, for that
matter, Wachovia alone.
o We believe there are insurmountable strategic and operational obstacles
to combining SunTrust and Wachovia.
o We believe that even if Wachovia were seeking to sell itself, which it
is not, the potential returns to Wachovia shareholders from a hostile
acquisition by SunTrust are unattractive.
There has been a great deal of speculation and inaccurate and misleading
information in the media recently about Wachovia, First Union and SunTrust.
Before going into detail on the SunTrust proposal, please allow us to set the
record straight.
Wachovia conducted an intensive review of its business strategy last year. That
review reaffirmed our belief that the greatest potential for future growth and
profitability lies in non-traditional banking businesses (such as securities
brokerage, capital markets, insurance and wealth management) and in
non-traditional approaches to traditional businesses (such as our integrated
approach to customer relationship management). Over a two-day period in March,
we described Wachovia's business strategies to investors. Their response was
favorable.
During our review, we considered whether merging with another financial
institution would help us achieve our goals. We knew that partnering with the
wrong financial institution would be detrimental to shareholder value. By
contrast, we determined that a partnership that broadens our product lines and
distribution and enhances market leadership could be advantageous. For several
years, we had contemplated the possible advantages of a Wachovia/First Union
merger to achieve these objectives. And when Ken Thompson, First Union's new
chief executive officer, laid out his company's business strategies last summer
it was clear they were remarkably similar to our own.
At the time, First Union was emerging from a period of some difficulties, mainly
arising from two past acquisitions. It was clear that we could not contemplate a
merger until Ken Thompson and his new management team had gotten the company
clearly on track. When talks with First Union began in earnest this April, an
intensive examination of its businesses showed the revitalization of the company
and a genuine turnaround. The performance of First Union's shares this year
suggests that investors agree with our conclusion.
The proposed merger of equals with First Union is compelling. It is built on a
genuine sharing of strengths and a cooperative determination of business
strategies and practices. For shareholders, the upside is substantial earnings
accretion from the outset and potential price-earnings multiple expansion in the
future. As our management teams have met over this past month to develop
business unit strategies, it has been exciting to see the early results of their
collaboration. The potential for growth and high performance seems even
stronger.
We have not seen this unique potential in our discussions with SunTrust.
Managers from both of our companies have discussed partnering several times over
the past decade. These discussions showed that our companies have certain common
values around customers, employees and shareholders. However, each time the
discussions broke off due to the inability to translate those values into
working business strategies and operating models. Time after time, our
discussions with SunTrust culminated in the conclusion that these companies
could not be combined in a way that realized either the core potential we see in
our own businesses or the enhanced potential we would seek for Wachovia
shareholders in a merger partner.
Our discussions in December of last year constituted an intense attempt to find
a way to combine our two institutions and again ended without an acceptable
transaction. One after another, Wachovia's senior managers came back from
discussions with their counterparts at SunTrust to report that they did not
believe the two operations could be combined productively. We concluded that
even with me serving as CEO of a combined SunTrust/Wachovia for two years,
maintaining the Wachovia name and Wachovia directors filling half the board, the
divergent strategies for future growth could not be reconciled.
That was the point at which we ended discussions in December. The structural
issues around our asset management businesses referred to by SunTrust were not,
in fact, the only reason for breaking off discussions; rather, they were
symptomatic of much broader issues. Wachovia has spent five years developing a
high-growth, high-profitability model for our wealth and asset management
business. We were unable to understand SunTrust's insistence that we return to a
lower-performance model previously discarded by Wachovia. That kind of refusal
to explore alternatives was endemic to our discussions regarding other primary
business issues as well.
Now we want to discuss four key points about SunTrust's hostile proposal.
A combined SunTrust/Wachovia will not provide adequate future earnings growth.
At a time when Wachovia and First Union are embracing a non-traditional approach
to banking, SunTrust remains a traditional bank, and a combined
SunTrust/Wachovia is merely a bigger traditional bank. SunTrust has now produced
lackluster growth over the past two years. Our examination of SunTrust's
businesses leads us to question its ability to reverse this stagnation.
We are concerned about SunTrust's inability to grow important business lines,
such as trust and asset management, and ultimately to sustain core earnings
growth. The deterioration in SunTrust's core earnings in the quarter ending
March 31, while not a surprise to us, is particularly disconcerting. In that
report, Sun Trust's profit margins clearly came under pressure, fee income was
stagnant, and earnings per share growth was dependent on one-time securities
transactions, cost reductions and share repurchases. For all these reasons, we
believe that a combination with SunTrust would act as a drag on Wachovia's
expected future earnings growth.
There is serious implementation risk in the SunTrust proposal. SunTrust is very
inexperienced in integration activities, having completed only one transaction
with a value greater than $100 million in the past 10 years. The Wachovia
transaction is three times larger than any integration attempted to date by
SunTrust and is twice as large as the combined assets of all its acquisitions
completed in the last 10 years. The fundamental strategic differences already
described are, we believe, crippling to the success of any future combination.
But even if they could be overcome, the cost savings promised by SunTrust are
significantly greater than those we jointly estimated in our December
discussions. In our view (and in SunTrust's own view last December), these new
cost savings numbers are unrealistically high. They could be achieved only
through actions that would slow the combined company's growth, hinder lines of
business, and lessen service quality. Even if the promised cost savings were
achieved, SunTrust projects minimal accretion to earnings per share. If our view
of the integration issues is correct, long-term earnings per share dilution
would be a more likely outcome. Even when using SunTrust's aggressive
assumptions, we expect the Wachovia/First Union merger to be approximately twice
as accretive as the SunTrust proposal.
SunTrust's proposal does not compensate Wachovia shareholders for SunTrust's
inadequate future earnings growth and serious implementation risk. SunTrust is
proposing a hostile transaction that is less attractive in many ways than the
combination we considered last December.
By the end of the day it was announced, the asserted 17% premium to the First
Union merger agreement fell to just 5%. Clearly the SunTrust stock price cannot
support an aggressive hostile transaction.
There is no dividend advantage to SunTrust's hostile proposal. The amended
merger agreement with First Union provides Wachovia shareholders the ability to
continue to receive their existing annual dividend payment of $2.40 per share.
Once the Wachovia/First Union merger is completed, all Wachovia shareholders
will have the option to choose either:
o an ongoing cash dividend payment equal to Wachovia's current $2.40
per share annual rate until the new Wachovia's dividend payment
meets or exceeds that rate per existing Wachovia share, or
o a special cash payment of $0.48 per existing Wachovia share at
closing, plus the regular new Wachovia dividend to be set
initially at an anticipated annual rate of $1.92 per existing
Wachovia share.
Future dividends are going to depend on the growth of the combined company, and
we are convinced that the new Wachovia can grow its dividends more rapidly than
SunTrust.
The bottom line is: our merger of equals with First Union is a thoughtful,
responsible strategic combination. It is off to an excellent start. We have
looked long and hard, and on multiple occasions, at a merger with SunTrust, and
concluded it just would not work. Five months after our last discussions broke
down, SunTrust is back with a less appealing hostile proposal to take over
Wachovia, and our conclusion is the same: it will not work.
We reject SunTrust's hostile takeover bid and we remain fully committed to our
merger with First Union.
We firmly believe that when you consider our reasons, you will support this
decision. We will be sending you detailed information in the coming weeks about
the new Wachovia and asking for your support.
On Behalf of Your Board of Directors
Sincerely,
L.M. Baker, Jr.
Chairman and Chief Executive Officer
This letter contains 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 and
Wachovia'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" and similar expressions. These statements are based upon the current
beliefs and expectations of First Union's and Wachovia'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 such
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 and Wachovia's results to differ
materially from those described in the forward-looking statements can be found
in First Union's and Wachovia's 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. All subsequent written and oral forward-looking statements
concerning the proposed transaction or other matters and attributable to First
Union or Wachovia or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements referenced above. First Union and
Wachovia do 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:
You are urged to read the definitive joint proxy statement/prospectus regarding
the proposed merger between First Union and Wachovia when it becomes available,
because it will contain important information. You may obtain a free copy of the
preliminary joint proxy statement/prospectus filed as part of First Union's
registration statement on Form S-4, and other filings containing information
about First Union and Wachovia, including the definitive joint proxy
statement/prospectus when it becomes available, without charge, 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 Corporation, Investor Relations, One First
Union Center, 301 South College Street, Charlotte, NC 28288-0206, 704-374-6782,
or to Wachovia Corporation, Investor Relations, 100 North Main Street,
Winston-Salem, NC 27150, 888-492-6397. Information regarding the participants in
the proxy solicitation and a description of their direct and indirect interest,
by security holdings or otherwise, is contained in the materials filed with the
SEC by each of First Union and Wachovia on April 16, 2001.
INTERNAL MEMO TO WACHOVIA CORPORATION'S SENIOR MANAGERS EXPLAINING THE DECISION
TO REJECT SUNTRUST BANKS, INC'S PROPOSAL
To: Senior Managers of Wachovia Companies
From: L.M. Baker, Jr.
Date: May 22, 2001
Subject: Board Rejects SunTrust's Hostile Offer
Last week, SunTrust Bank Inc. made an unsolicited proposal to acquire Wachovia
Corporation. This afternoon, Wachovia's board of directors voted to reject
SunTrust's proposal and reaffirmed its commitment to the planned merger of
equals with First Union Corporation. The SunTrust proposal does not benefit our
employees, customers or shareholders and does not give Wachovia any reason to
abandon the proposed First Union merger and accede to a hostile acquisition.
During the last year, Wachovia's senior executive management conducted an
intensive review of its business strategy. That review reaffirmed our belief
that the greatest potential for future growth and profitability lies in
non-traditional banking businesses (such as securities brokerage, capital
markets, insurance and wealth management) and in non-traditional approaches to
traditional businesses (such as our integrated approach to customer relationship
management). As you know, we described our business strategies to investors in
March, and their response was favorable.
Also during the business strategy review last year, careful consideration was
given to the possibility that Wachovia's ability to achieve its strategic goal
could be enhanced through a partnership with the right financial institution.
The right partnership could broaden product lines and distribution and enhance
market leadership. We also determined that a partnership with the wrong
financial institution could be detrimental to shareholder value. We have
considered such partnerships with First Union and SunTrust.
The merger of equals proposed with First Union is compelling. The business
strategies First Union's new CEO Ken Thompson outlined last summer were
remarkably similar to Wachovia's. However, First Union was emerging from a
period of some difficulty mainly arising from two past acquisitions. It was
clear that a merger could not be contemplated until Ken and his new management
team had gotten the company clearly on track. When talks resumed in April 2000,
our due diligence team conducted an intensive examination of First Union's
businesses revealing that a genuine turnaround had occurred. The performance of
First Union's stock this year suggests that investors share our conclusion.
A SunTrust/Wachovia partnership also was investigated as a possible combination.
Our respective managers now have discussed such a partnership several times in
the past decade. Each time discussions have broken off because of differences in
core long-term business strategies and operating models. The discussions in
December of last year constituted an intense attempt to determine if it was in
the best interests of all parties to combine our two institutions. Wachovia's
senior managers consistently came back from discussions with their SunTrust
counterparts to report that it was not.
We concluded in December that even with me serving as CEO for the first two
years after completing a transaction with SunTrust and with Wachovia directors
filling half the board of a combined SunTrust/Wachovia, our divergent strategies
for future growth could not be reconciled. It was evident that Wachovia would be
stronger operating independently than it would be by entering into such a
partnership. Wachovia, like First Union, strongly believes that in the future
the most profitable financial services companies will be those pursuing a
non-traditional approach.
Symbolic of this non-traditional approach and the success that can result is the
business model Wachovia has implemented in Asset and Wealth Management. This
model has been very profitable and resulted in high growth. SunTrust insisted
that Wachovia return to the previous model that had not produced the desired
results. Similar differences became apparent in discussions about other key
lines of business.
Details of the SunTrust proposal and our view of each key piece are outlined in
a letter that will be mailed to shareholders tomorrow and in an analysis of the
SunTrust hostile offer that is available to you and your employees on WNFO.
Feedback from employees and shareholders has shown that two elements of
Wachovia's proposed merger with First Union - my personal pension benefits and
the confusion about the dividend shareholders would receive from the new
Wachovia - have distracted some from recognizing the many benefits of this
combination. Last week, I announced that I would not accept any increase in
retirement compensation. In addition, the amended merger agreement with First
Union provides Wachovia shareholders the ability to continue to receive their
existing annual dividend payment of $2.40 per share. Once the Wachovia/First
Union merger is completed, all Wachovia shareholders will have the option to
choose either:
an ongoing cash dividend payment equal to Wachovia's current $2.40 per
share annual rate until the new Wachovia's dividend payment meets or
exceeds that rate per existing Wachovia share, or a special cash
payment of $0.48 per existing Wachovia share at closing, plus the
regular new Wachovia dividend to be set initially at an anticipated
annual rate of $1.92 per existing Wachovia share.
By eliminating these distractions, we hope that all stakeholders will realize
the long-term benefits and opportunities that the proposed First Union/Wachovia
merger provides.
Please share information with your employees and encourage them to read the
materials available on WNFO. This information will help them personally
understand this process and provide direction on how they should discuss this
topic with their customers.
Wachovia's merger of equals with First Union is a thoughtful, responsible
strategic combination. As Bob McCoy shared with you last week, our integration
process is off to an excellent start. In the past, careful consideration has
been given to a merger with SunTrust but to no avail. SunTrust's latest proposal
is less attractive than those previously presented, and I fully support our
board's decision to reject it. As we were prior to the announcement of
SunTrust's proposal last week, Wachovia is fully committed to our proposed
merger with First Union. It is the best transaction for our employees,
customers, shareholders and the communities we serve.
This communication contains 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 and
Wachovia'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" and similar expressions. These statements are based upon the
current beliefs and expectations of First Union's and Wachovia'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 such
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 and Wachovia's results to differ
materially from those described in the forward-looking statements can be found
in First Union's and Wachovia's 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. All subsequent written and oral forward-looking statements
concerning the proposed transaction or other matters and attributable to First
Union or Wachovia or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements referenced above. First Union and
Wachovia do 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:
You are urged to read the definitive joint proxy statement/prospectus regarding
the proposed merger between First Union and Wachovia when it becomes available,
because it will contain important information. You may obtain a free copy of the
preliminary joint proxy statement/prospectus filed as part of First Union's
registration statement on Form S-4, and other filings containing information
about First Union and Wachovia, including the definitive joint proxy
statement/prospectus when it becomes available, without charge, 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 also can be obtained, without charge, by
directing a request to First Union Corporation, Investor Relations, One First
Union Center, 301 South College Street, Charlotte, NC 28288-0206, 704-374-6782,
or to Wachovia Corporation, Investor Relations, 100 North Main Street,
Winston-Salem, NC 27150, 888-492-6397. Information regarding the participants in
the proxy solicitation and a description of their direct and indirect interest,
by security holdings or otherwise, is contained in the materials filed with the
SEC by each of First Union and Wachovia on April 16, 2001.
PRESS RELEASE ISSUED BY WACHOVIA CORPORATION REQUESTING SUNTRUST BANKS, INC.'S
BOARD OF DIRECTORS ABANDON ITS HOSTILE TAKEOVER PROPOSAL
[WACHOVIA LOGO APPEARS HERE]
- --------------------------------------------------------------------------------
News Announcement
Wachovia Corporation
Atlanta, GA 30383
Winston-Salem, NC 27150
For Additional Information:
Robert S. McCoy, Jr.
Chief Financial Officer, 336-732-5926
Marsha L. Smunt
Investor Relations, 336-732-5788
May 23, 2001
Wachovia Board Calls on SunTrust to Abandon its Hostile Takeover Proposal
-------------------------------------------------------------------------
WINSTON-SALEM, N.C. - Wachovia Corporation (NYSE: WB) announced today
that its board of directors has called on the board of SunTrust Banks Inc.
to abandon its hostile takeover proposal. Calling SunTrust's effort
expensive, time consuming and disruptive to customers and employees of both
organizations, the Wachovia board noted that SunTrust lost $1.4 billion, or
7.4 percent of its total shareholder value, on the day its unsolicited
offer was announced.
On April 16, 2001, Wachovia announced a merger of equals with
First Union Corporation (NYSE: FTU). The Wachovia board has strongly
reaffirmed its commitment to that merger.
The text of the letter to SunTrust's board follows:
May 22, 2001
The Board of Directors
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Dear Members of the Board:
We were disappointed to receive the unsolicited proposal from SunTrust that
was delivered to the Wachovia board from Mr. Humann on May 14, 2001. Please
be assured that our board of directors entered into the agreement with
First Union after a careful review of all of Wachovia's strategic options,
including the possibility of exploring further discussions with SunTrust.
These options were thoroughly examined, and we remain confident in our
chosen strategy. Indeed, SunTrust's recent negative advertisements, press
strategy and hostile conduct further buttress our prior conclusions as to
the incompatibility of SunTrust and Wachovia as merger partners.
As we are sure you are aware, Wachovia's board has a long and thorough
knowledge of your company. In the fall of 1997 and again in the late fall
of 2000, extensive due diligence was undertaken by both organizations in a
good faith effort to ascertain the long-term benefits to our shareholders
of merging our organizations.
In January of this year, Wachovia's board reviewed very carefully its
strategic options, including yet again a review of a possible merger with
SunTrust. With our knowledge of your organization and its operations, the
financial considerations and other important issues we must consider in the
exercise of our business judgment, the board concluded that a combination
of our institutions would not be advantageous to Wachovia's shareholders.
On April 15, the Wachovia board approved and entered into a merger
agreement with First Union. The Wachovia board of directors met again today
to review the unsolicited proposal you publicly announced last week to
acquire Wachovia. After giving it careful and objective consideration and
with the advice of our financial and legal advisors, our board once again
strongly reaffirmed its commitment to our strategic merger with First
Union.
Our firmly held view is that a combination with SunTrust is simply the
wrong transaction for Wachovia, its shareholders and other key
constituencies. Our reasons for reaching this conclusion are set forth in
greater detail in a letter we are sending to our shareholders (a copy of
which is attached).
We hope that you will respect our decision and ask that you abandon your
current strategy. We acted in good faith last fall when we mutually
explored a possible SunTrust/Wachovia transaction - a concept we have each
explored on numerous occasions to no avail. We agreed with the decision to
terminate discussions following the unanimous determination of our senior
management team that a SunTrust transaction was not in Wachovia's best
interests.
A continuation of your current efforts is not in anyone's interest. The
Wachovia board is committed to the First Union transaction, and we are
confident that it will receive the support of our shareholders. Continued
efforts on SunTrust's part will be expensive, time-consuming and disruptive
to the customers and employees of both of our organizations and distracting
to our respective management teams. SunTrust lost $1.4 billion, or 7.4
percent of its total shareholder value, on the day of announcement. Further
hostile actions will not serve SunTrust's or Wachovia's best interests.
We sincerely urge you to respect our decision and to withdraw. We think we
will both serve our shareholders, customers, employees and communities best
by competing in the banking business.
Sincerely,
L. M. Baker, Jr., Chairman, President
and Chief Executive Officer
Wachovia Corporation, with dual headquarters in Atlanta and
Winston-Salem, N.C., is a leading financial holding company serving
regional, national and international markets. As of March 31, 2001,
Wachovia had assets of $75.6 billion. Member companies offer consumer and
commercial banking, bank card, asset and wealth management, capital markets
and investment banking, community development finance, brokerage and
insurance services. Wachovia Bank, N.A., the principal subsidiary, has
nearly 650 offices and 1,350 ATMs primarily in Florida, Georgia, North
Carolina, South Carolina and Virginia.
This news release contains 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 and Wachovia'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" and
similar expressions. These statements are based upon the current beliefs
and expectations of First Union's and Wachovia'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
such 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 and Wachovia's results to differ materially from those described in
the forward-looking statements can be found in First Union's and Wachovia's
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. All
subsequent written and oral forward-looking statements concerning the
proposed transaction or other matters and attributable to First Union or
Wachovia or any person acting on their behalf are expressly qualified in
their entirety by the cautionary statements referenced above. First Union
and Wachovia do 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:
You are urged to read the definitive joint proxy statement/prospectus
regarding the proposed merger between First Union and Wachovia when it
becomes available, because it will contain important information. You may
obtain a free copy of the preliminary joint proxy statement/prospectus
filed as part of First Union's registration statement on Form S-4, and
other filings containing information about First Union and Wachovia,
including the definitive joint proxy statement/prospectus when it becomes
available, without charge, 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
also can be obtained, without charge, by directing a request to First Union
Corporation, Investor Relations, One First Union Center, 301 South College
Street, Charlotte, NC 28288-0206, 704-374-6782, or to Wachovia Corporation,
Investor Relations, 100 North Main Street, Winston-Salem, NC 27150,
888-492-6397. Information regarding the participants in the proxy
solicitation and a description of their direct and indirect interest, by
security holdings or otherwise, is contained in the materials filed with
the SEC by each of First Union and Wachovia on April 16, 2001.
TRANSCRIPT OF VOICE MAIL MESSAGE DELIVERED TO ALL WACHOVIA EMPLOYEES ON MAY 23,
2001 EXPLAINING WACHOVIA CORPORATION'S BOARD OF DIRECTORS DECISION TO REJECT
SUNTRUST BANKS, INC.'S UNSOLICITED ACQUISITION PROPOSAL
This is for all Wachovia employees. Please listen carefully to the following
message.
The following message is from Bud Baker:
As you all know, SunTrust very publicly announced an aggressive and hostile bid
to acquire Wachovia last week. Wachovia's board of directors has voted to reject
SunTrust's proposal and to reaffirm our commitment to First Union. I fully
support their decision. The proposal did not benefit our employees, customers or
shareholders, nor did it give Wachovia any reason to abandon our proposed
alliance with First Union.
In the past year, your senior executive team has had conversations with First
Union and SunTrust to evaluate whether a potential partnership would help
Wachovia achieve its potential more effectively than remaining independent.
Wachovia was not for sale then and is not for sale today. The First Union merger
of equals was determined to be the correct strategic decision.
The board also, decided during the meeting yesterday, to increase the dividend
that shareholders will receive in the proposed merger with First Union. Having
addressed the dividend and any questions about my own personal benefits, we hope
that any distractions have been eliminated that may prevent all stakeholders
from considering the real benefits and opportunities the proposed First Union
merger provides.
More detailed information about the SunTrust proposal and why it was rejected is
available on WNFO. Please take a moment to read these materials so that you will
have a better understanding of the board's decision and the benefits of the
proposed merger with First Union. This information will help you respond to
related questions or comments you may receive from customers.
I also want to express my appreciation to you for not allowing distraction by
these events and for your continued dedication to the business at hand and to
superior customer service. I am proud to serve with you in Wachovia.