SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 18, 1997
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FIRST UNION CORPORATION
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(Exact name of registrant as specified in its charter)
North Carolina 1-10000 56-0898180
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704)374-6565
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
On November 18, 1997, First Union Corporation (the "Corporation")
entered into an Agreement and Plan of Mergers (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of CoreStates
Financial Corp ("CoreStates") into the Corporation. Pursuant to the Merger
Agreement, each outstanding share of CoreStates common stock would be converted
into 1.62 shares of the Corporation's common stock (the "Exchange Ratio"),
subject to possible adjustment under certain circumstances.
The Merger is intended to constitute a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted for
as a pooling of interests. Consummation of the Merger is subject to various
conditions, including: (i) receipt of the approval of the Merger Agreement by
CoreStates' and the Corporation's stockholders, and approval by the
Corporation's stockholders of an amendment to the Corporation's Articles of
Incorporation to increase the number of authorized shares of the Corporation's
common stock from 750,000,000 to 2,000,000,000; (ii) receipt of requisite
regulatory approvals from the Board of Governors of the Federal Reserve System
and other federal and state regulatory authorities; (iii) receipt of opinions as
to the tax and accounting treatment of certain aspects of the Merger; (iv)
listing, subject to notice of issuance, of the Corporation's common stock to be
issued in the Merger; and (v) satisfaction of certain other conditions.
In connection with the Merger Agreement, the Corporation and
CoreStates entered into the following Stock Option Agreements: (i) a stock
option agreement dated November 18, 1997 (the "CoreStates Stock Option
Agreement"), pursuant to which CoreStates granted to the Corporation an option
to purchase, under certain circumstances, up to 39,364,847 shares of CoreStates
common stock at a price, subject to certain adjustments, of $72.00 per share
(the "CoreStates Option"); and (ii) a stock option agreement dated November 18,
1997 (the "Corporation Stock Option Agreement"), pursuant to which the
Corporation granted to CoreStates an option to purchase, under certain
circumstances, up to 56,285,593 shares of the Corporation's common stock at a
price, subject to certain adjustments, of $52.00 per share (the "Corporation
Option") (collectively, the "Option Agreements" and the "Options"). The
CoreStates Option, if exercised, would give the holder thereof the right to
acquire, before giving effect to the exercise of the CoreStates Option, up to
19.9% of the total number of shares of CoreStates common stock outstanding. The
Corporation Option, if exercised, would give the holder thereof the right to
acquire, before giving effect to the exercise of the Corporation Option, up to
9.9% of the total number of shares of the Corporation's common stock
outstanding. The Option Agreements were granted by the respective parties as
conditions and inducements to each others' willingess to enter into the Merger
Agreement. Under certain circumstances, the respective issuers of the Options
may be required to repurchase the Options or the shares acquired pursuant to the
exercise thereof.
The Merger Agreement may be terminated under certain circumstances,
including by the Board of Directors of CoreStates by giving notice to the
Corporation if either (x) both (i) the average closing price of the
Corporation's common stock for the ten full trading days ending on the date the
Federal Reserve Board approves the Merger (the "Average Closing Price") is less
than the product of the closing price of the Corporation's common stock (the
"Starting Price") on the first full trading
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day after public announcement of execution of the Merger Agreement (the
"Starting Date") and 0.85, and (ii) the number obtained by dividing the Average
Closing Price by the Starting Price is less than the number obtained by (a)
dividing the weighted average of the closing prices of a specified group index
of bank stocks during the above-mentioned ten-day period by the weighted average
closing prices of such bank stocks on the Starting Date and (b) subtracting
0.15, or (y) the Average Closing Price is less than the product of the Starting
Price and 0.75. In the event CoreStates gives notice of its intent to terminate
the Merger Agreement pursuant to the conditions set forth in the preceding
sentence, the Corporation may determine, in its sole discretion, to increase the
Exchange Ratio to eliminate CoreStates' right to terminate the Merger Agreement.
A copy of a news release (the "News Release") relating to the Merger is
being filed as Exhibit (99)(a) to this report and is incorporated herein by
reference.
On November 19, 1997, the Corporation intends to hold a meeting (the
"Meeting") with analysts and others with respect to the Merger. At the Meeting,
certain financial and other information relating to the Merger is to be
presented (the "Presentation Materials"). The News Release and certain of the
Presentation Materials contain, among other things, certain forward-looking
statements regarding each of the Corporation, CoreStates and the combined
company following the Merger, including statements relating to cost savings,
enhanced revenues and accretion to reported earnings that may be realized from
the Merger, and certain restructuring charges expected to be incurred in
connection with the Merger. Such forward-looking statements involve certain
risks and uncertainties, including a variety of factors that may cause the
Corporation's actual results to differ materially from the anticipated results
or other expectations expressed in such forward-looking statements. Factors that
might cause such a difference include, but are not limited to: (1) expected cost
savings from the Merger and the Corporation's other pending acquisitions may not
be fully realized or realized within the expected time frame; (2) revenues
following the Merger and the other pending acquisitions may be lower than
expected, or deposit attrition, operating costs or customer loss and business
disruption following the Merger and the other pending acquisitions may be
greater than expected; (3) competitive pressures among depository and other
financial institutions may increase significantly; (4) costs or difficulties
related to the integration of the business of the Corporation, CoreStates, and
the other pending acquisitions may be greater than expected; (5) changes in the
interest rate environment may reduce margins; (6) general economic or business
conditions, either nationally or in the states or regions in which the
Corporation does business, may be less favorable than expected, resulting in,
among other things, a deterioration in credit quality or a reduced demand for
credit; (7) legislative or regulatory changes may adversely affect the
businesses in which the Corporation is engaged; and (8) changes may occur in the
securities markets. Additional information with respect to factors that may
cause actual results to differ materially from those contemplated by such
forward-looking statements is included in the Corporation's 1997 Third Quarter
Report on Form 10-Q and may be included in subsequent reports filed by the
Corporation with the Securities and Exchange Commission.
A copy of the visual portion of the Presentation Materials is being
filed as Exhibit (99)(b) to this report, substantially in the form intended to
be presented at the Meeting, and such materials are incorporated herein by
reference.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
(99)(a) The News Release.
(99)(b) The Presentation Materials.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: November 18, 1997 By: /s/ Kent S. Hathaway
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Name: Kent S. Hathaway
Title: Senior Vice President
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EXHIBIT INDEX
Exhibit No. Description
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(99)(a) The News Release.
(99)(b) The Presentation Materials.
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