Tuesday
November 18, 1997
FIRST UNION AND CORESTATES ANNOUNCE MERGER AGREEMENT-
$204 BILLION COMPANY TO BE THE LEADING BANK ON THE EAST COAST
PHILADELPHIA - First Union Corporation (NYSE:FTU) and CoreStates Financial Corp
(NYSE:CFL) have signed a definitive merger agreement that would create a $204
billion financial services company with the leading banking presence on the
Eastern Seaboard.
The combined company will have the largest share of retail deposits on the East
Coast, including the top market share in New Jersey and Pennsylvania, and the
leading share in the city of Philadelphia. With 2,766 offices serving 16 million
customers, it will be the nation's sixth largest banking company. As of Sept.
30, 1997, Philadelphia-based CoreStates had assets of $47.6 billion.
"While this merger is important strategically, it also meets our financial
performance criteria by being cumulatively accretive within 18 months," said
Edward E. Crutchfield, chairman and chief executive officer of First Union Corp.
First Union expects to bring 3,000 new jobs to the Greater Philadelphia
Metropolitan Area as Philadelphia becomes the headquarters for the combined
five-state regional banking group, which includes Connecticut, New York,
Delaware, New Jersey and Pennsylvania. Philadelphia will also become the
headquarters for the combined corporate banking functions for the entire
corporation and a major center for the combined bank's customer service
operations. The new jobs are expected to significantly offset the impact of
merger-related job reductions.
In addition to expanding the Philadelphia-based operations, First Union will
establish and fund a $100 million Foundation dedicated to enriching the region
CoreStates serves. The majority of the directors of the Foundation will come
from the CoreStates Board of Directors. The Foundation's Board of Directors will
be chaired by the chief executive officer of CoreStates.
--MORE--
FIRST UNION AND CORESTATES ANNOUNCE MERGER -- PAGE 2
First Union will also establish a $16 million Employee Training and Development
Fund to assist any displaced employees by providing additional training for
positions within First Union or other companies in the region.
"We are particularly pleased that First Union is demonstrating an unwavering
commitment to the growth and vitality of the region CoreStates serves.
CoreStates would only consider a merger that clearly enhanced our ability to
create superior long-term value for our customers, shareholders, employees and
the communities we serve," said Terrence A. Larsen, chairman and chief executive
officer of CoreStates. "Our combined organization will enable us to leverage our
expertise, products and customer relationships in a powerful new way. Together,
we will be unbeatable."
"CoreStates has established leadership positions in corporate banking,
international trade finance, cash management, small business banking, electronic
banking, retail banking and other key areas," said Edward E. Crutchfield,
chairman and chief executive officer of First Union Corp. "This merger will
create the premier banking organization on the East Coast."
First Union has agreed to exchange 1.62 shares of its common stock for each
share of CoreStates common stock. Based on First Union's closing stock price of
$51.75 on Nov. 14, 1997, the transaction would be valued at $16.6 billion and
represent an exchange value of $83.84 for each share of CoreStates common stock.
First Union expects the merger to be cumulatively accretive to earnings within
18 months. This estimate excludes estimated after-tax merger-related
restructuring charges of approximately $795 million which are anticipated to be
taken in the second quarter of 1998.
As with any earnings estimates, there are factors that could cause the actual
results to differ materially from such estimates, such as changes in economic
conditions and other factors indicated on a Form 8-K filed with the Securities
and Exchange Commission.
Following the merger, the Office of the Chairman will include Crutchfield as
chairman and chief executive officer, Larsen as vice chairman and First Union's
John Georgius as president. Six members of the CoreStates Corporate Board of
Directors will join the First Union Corporate Board.
In his role as First Union Corporation's vice chairman, Larsen will have direct
leadership responsibilities for the combined company's corporate banking
functions which include specialized industry lending, large corporate lending,
and capital markets businesses such as investment banking, merchant banking,
leasing, international, funds management and other key operations.
--MORE--
FIRST UNION AND CORESTATES ANNOUNCE MERGER -- PAGE 3
Larsen will also serve as Chairman of the combined five-state Regional Bank
Board of Directors. As the senior officer for the regional bank, Larsen will
take responsibility for overseeing the effective integration into one
organization. The combined banking assets in the five-state region will total
approximately $80 billion.
The combined company will have the first, second or third-largest share of
deposits in 21 of the 30 largest metropolitan areas on the East Coast.
"First Union and CoreStates have very strong compatibility in overall values as
well as in the approach taken to customers. I intend to take every opportunity
to reinforce our focus on customer needs and to build on our relationships with
customers and all of our stakeholders," Larsen said.
The merger, which will be accounted for as a pooling of interests, is expected
to be consummated by April 30, 1998, pending CoreStates and First Union
shareholder approval, regulatory approval and other customary conditions of
closing. In connection with the execution of the merger agreement, CoreStates
granted First Union an option to purchase, under certain circumstances, up to
19.9 percent of CoreStates's outstanding shares of common stock. In addition,
First Union granted CoreStates an option to purchase, under certain
circumstances, up to 9.9 percent of First Union's outstanding shares of common
stock.
Media contacts are Tish Signet and Mary Eshet of First Union at 800-669-5855,
and Gary Brooten and George Biechler of CoreStates at 215-973-3546. Investor
contacts are Alice Lehman of First Union at 704-374-4139, and George Karklins of
CoreStates at 215-973-4185.
--END--