Filed by SunTrust Banks, Inc.
Pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to
Rule 14a-12 under the Securities Exchange
Act of 1934
Subject Company: Wachovia Corporation
Commission File No. 1-9021
Date: July 6, 2001
THE FOLLOWING PRESS RELEASE WAS ISSUED BY SUNTRUST
News
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[SUNTRUST LOGO]
CONTACTS:
Investors Media
Gary Peacock Barry Koling George Sard/Debbie Miller/Denise DesChenes
SunTrust SunTrust Citigate Sard Verbinnen
404-230-5392 404-230-5268 212-687-8080
For Immediate Release
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July 6, 2001
SUNTRUST URGES WACHOVIA SHAREHOLDERS TO
COMPARE DIVIDEND PROPOSALS
ATLANTA, GA - SunTrust Banks, Inc. (NYSE:STI) sent the following letter to
the shareholders of Wachovia Corporation (NYSE:WB) detailing why SunTrust
believes its dividend history and dividend proposal are superior to First Union
Corporation's (NYSE:FTU) and urging Wachovia shareholders to vote against the
proposed First Union transaction.
The text of the letter follows:
July 5, 2001
Dear Wachovia Shareholder:
The preservation and potential growth of your cash dividend undoubtedly
will be a key factor in deciding how to vote on the First Union merger proposal
- and we believe First Union's dividend proposal is a compelling reason to vote
"AGAINST" the First Union merger.
If you have held your Wachovia shares for the past five years, you have
seen your annual dividend increase each year, growing steadily from $1.52 per
share in 1996 to $2.40 per share in 2001 (on an annualized basis). BUT IF THE
FIRST UNION MERGER IS APPROVED AND COMPLETED, YOU WILL BE FORCED TO SURRENDER
YOUR WACHOVIA SHARES IN EXCHANGE FOR FIRST UNION SHARES. So it is important to
look closely at First Union's recent dividend history, and to consider what
First Union is proposing about future dividend payments. It also is important to
decide whether you are comfortable with the future of your dividend payments if
you end up holding First Union stock. You may conclude that the last thing you
want to do is rely on First Union for the dividend payments you've come to
expect.
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The potential cost to you of First Union's dividend proposal as compared to
SunTrust's is shown on the insert which accompanies this letter. One side of the
insert compares the proposals, assuming 6% annual growth in dividends. Of
course, the greater the assumed annual dividend growth rate, the greater the
potential cost to you - and SunTrust's compounded annual dividend growth rate
during the last five years has been 14%. The other side of the insert
demonstrates the dollar cost to Wachovia shareholders at various share ownership
levels, using the same assumptions, over the next 5 years.
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FIRST UNION'S DIVIDEND:
LOWER TODAY THAN FIVE YEARS AGO
While the dividend on your Wachovia shares increased by 58% during the past
five years, shareholders of First Union have not fared nearly as well with their
dividends. In fact, over the same five-year period, First Union's dividend fell
from $1.10 per share in 1996 to only $0.96 per share today - a drop of 13%. THIS
DECLINE IS A DIRECT RESULT OF FIRST UNION CUTTING ITS DIVIDEND IN HALF DURING
THE FIRST QUARTER OF THIS YEAR. The slashing of First Union's dividend followed
its poorly executed acquisitions in recent years of CoreStates Financial Corp.
and The Money Store. The CoreStates acquisition resulted in major integration
problems, and last year First Union shut down The Money Store, contributing to
an astounding $4.9 billion charge to earnings - one of the largest charges
against earnings in the history of corporate America!
SUNTRUST'S DIVIDEND: SIXTEEN YEARS OF STEADY GROWTH
There is, of course, an alternative to the First Union merger proposal. We
believe that if Wachovia shareholders reject the First Union merger by voting
"AGAINST" Proposal No. 1 on the enclosed BLUE proxy card, that rejection could
very well lead to a merger between Wachovia and SunTrust.
In considering your choices, you should also look closely at SunTrust's
dividend record. Much like Wachovia's recent dividend history - and in stark
contrast to First Union's - SunTrust's dividend has increased during the past
five years from $0.83 per share in 1996 to $1.60 per share today (on an
annualized basis). This is an increase during the five-year period of 93%.
SUNTRUST HAS NEVER CUT ITS PER SHARE DIVIDEND RATE, AND HAS INCREASED ITS
DIVIDEND EVERY YEAR SINCE ITS FORMATION IN 1985. And SunTrust shareholders have
never been blindsided with a massive dividend cut like First Union's staggering
50% cut earlier this year - a cut which cost unsuspecting First Union
shareholders an aggregate of almost $500,000,000 in dividend payments in the
first half of this year alone.
WHICH DIVIDEND APPROACH SUITS YOU BEST-
SUNTRUST'S SIMPLICITY OR FIRST UNION'S COMPLEXITY?
The payment of dividends under SunTrust's merger proposal is simple and
straightforward. Our proposal provides for an increase in SunTrust's per share
dividend rate, so that Wachovia shareholders would receive on a pro forma basis
a dividend equal to the $2.40 per share dividend they currently receive.
The First Union dividend proposal, on the other hand, is unusual and highly
complex. FIRST UNION WOULD PROVIDE YOU WITH AN ANNUAL COMMON STOCK DIVIDEND RATE
OF ONLY $1.92 PER SHARE ON A PRO FORMA BASIS - $0.48 PER YEAR LESS THAN YOU
CURRENTLY RECEIVE FROM WACHOVIA. Because of this, First Union is offering you a
choice of either a one-time cash payment of $0.48 per share upon completion of
the merger, or so-called "dividend equalization preferred shares" (which First
Union calls "DEPs") that are designed to pay a dividend which, when added to the
dividend you would receive on the First Union common stock, would equal on a pro
forma basis a $2.40 annual dividend per share of Wachovia common stock.
If the First Union merger is approved and you choose the one-time payment
option, you would not be entitled to any further payment to make up for any
dividend shortfalls (as compared
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to your current Wachovia dividend rate of $2.40 per share) after the first year
following a First Union merger. And First Union would have to increase its
current dividend by 25% one year after the merger just to get you back to the
same per share dividend rate that you currently enjoy. DO YOU REALLY BELIEVE
THAT FIRST UNION, WHICH ONLY MONTHS AGO SLASHED ITS DIVIDEND BY 50%, WILL
INCREASE ITS DIVIDEND BY 25% IN A SINGLE YEAR?
If instead you choose to receive the First Union DEPs, your dividend will
be tied to two separate securities: First Union common stock and the new and
unusual DEPs. FIRST UNION ITSELF HAS ADMITTED THAT THE DEPs MAY NOT QUALIFY FOR
LISTING, TRADING OR QUOTATION ON ANY EXCHANGE OR DEALER QUOTATION SYSTEM. THIS
MEANS THAT YOU MAY FIND IT VERY DIFFICULT TO SELL YOUR DEPS, IF YOU ARE ABLE TO
SELL THEM AT ALL.
In addition, there is nothing "preferred" about the dividend on the DEPs,
which First Union has said rank equally as to dividends with the First Union
common stock. According to First Union, DEP dividends will be paid "when
declared" by the First Union Board. Moreover, while First Union has
characterized dividends on the DEPs as "cumulative," you should know that if
First Union does not pay you a dividend on the DEPs for any quarter, it has no
obligation to pay you that missed dividend in the future (except, possibly, in
the event First Union liquidates).
FUTURE DIVIDEND GROWTH: FIRST UNION STARTS $0.48 BEHIND
First Union attempts to portray the DEPs as a device which would restore
your dividend on a pro forma basis to the current $2.40 per share dividend you
currently receive from Wachovia. Unfortunately, this is far from the full story.
No corporation, of course, can offer assurances about future dividend
rates, but some facts are obvious. If First Union's annual dividend increases,
the first $0.48 of that increase will serve only to reduce the dividend on the
DEPs, with no net increase in total dividends to the holder of DEPs. THE FIRST
UNION ANNUAL COMMON STOCK DIVIDEND WOULD HAVE TO INCREASE BY MORE THAN $0.48 PER
SHARE BEFORE A DEP HOLDER SAW THE FIRST PENNY OF AN ACTUAL DIVIDEND INCREASE.
With SunTrust stock, however, the result is quite different. The full
amount of any increase in SunTrust's annual common stock dividend rate would be
received by you as a holder of SunTrust stock in the event of a
Wachovia-SunTrust merger.
SUNTRUST: THE DIVIDEND THAT MAKES SENSE
It is clear to us that SunTrust's dividend history and dividend proposal
are far superior to First Union's.
o SUNTRUST HAS THE DIVIDEND WITH A SOLID GROWTH RATE. First Union's
dividend rate is lower today than it was five years ago.
o SUNTRUST HAS THE DIVIDEND THAT HAS EXPERIENCED 16 CONSECUTIVE YEARS OF
INCREASES. First Union has the dividend that was cut in half a few
months ago.
o SUNTRUST PROPOSES TO MAINTAIN YOUR CURRENT CASH DIVIDEND RATE if it
merges with Wachovia, and the full amount of your dividend would be
paid on your shares of common stock - just as it is today. First
Union's dividend proposal is described above and, frankly, is too
complicated to describe again.
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IN YOUR OWN BEST INTERESTS, WE URGE YOU TO VOTE "AGAINST" THE FIRST UNION
MERGER PROPOSAL ON THE ENCLOSED BLUE PROXY CARD. DEFEATING THE FIRST UNION
MERGER PROPOSAL IS THE CRUCIAL FIRST STEP IN SECURING THE BENEFITS OF A PROPOSED
MERGER WITH SUNTRUST. PLEASE SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD
TODAY.
Thank you for your support.
Sincerely,
/s/ L. Phillip Humann
L. Phillip Humann
Chairman, President and
Chief Executive Officer
If you have any questions or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of proxies: Innisfree M&A
Incorporated, toll free, 1-877-750-9501.
Note: Dividends are payable on SunTrust common stock when, as and if declared by
the Board of Directors of SunTrust out of funds legally available therefor.
Accordingly, any declaration of dividends on SunTrust common stock in the future
will be at the discretion of the SunTrust Board of Directors and will depend
upon SunTrust's future earnings and financial condition and other factors. While
SunTrust has not reduced the dividend on its common stock at any time in the
past, there can be no assurance that SunTrust will continue to pay dividends on
SunTrust common stock in the amounts set forth in this letter or otherwise.
These same factors should be viewed as being generally applicable to the payment
of dividends by First Union and Wachovia.
The letter that was sent to Wachovia shareholders includes an insert containing
a chart titled "Illustrative Dividend Comparison: SunTrust Vs. First Union" and
a table titled "Cost to Wachovia Shareholders of First Union Dividend Proposal
As Compared To SunTrust Dividend Proposal Over Five-Year Period." The chart and
table will be available at www.suntrustwachoviaproposal.com.
SunTrust Banks, Inc., headquartered in Atlanta, Georgia, is the nation's
ninth-largest commercial banking organization. As of March 31 2001, SunTrust had
total assets of $103.7 billion and total deposits of $65.5 billion. The company
operates through an extensive distribution network in Alabama, Florida, Georgia,
Maryland, Tennessee, Virginia and the District of Columbia and also serves
customers in selected markets nationally. Its primary businesses include
deposit, credit, trust and investment services. Through various subsidiaries the
company provides credit cards, mortgage banking, insurance, brokerage and
capital markets services. SunTrust's Internet address is www.suntrust.com
# # #
This press release 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 a merger between
SunTrust and Wachovia Corporation, including future financial and operating
results, cost savings and accretion to reported and cash earnings that may be
realized from such merger; (ii) statements with respect to SunTrust'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
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SunTrust'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 businesses of SunTrust and Wachovia may 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, including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers, may be greater
than expected following the merger; (5) the regulatory approvals required for
the merger may not be obtained on the proposed terms or on the anticipated
schedule; (6) the failure of SunTrust's and Wachovia's stockholders to approve
the merger; (7) competitive pressures among depository and other financial
institutions may increase significantly and may 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 SunTrust's results to differ materially from those described in the
forward-looking statements can be found in SunTrust'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 SunTrust or any person acting on its behalf are expressly
qualified in their entirety by the cautionary statements above. SunTrust does
not undertake any obligation to update any forward-looking statement to reflect
circumstances or events that occur after the date the forward-looking statements
are made.
On May 14, 2001, SunTrust delivered a merger proposal to the Board of Directors
of Wachovia. Subject to future developments, SunTrust intends to file with the
SEC a registration statement at a date or dates subsequent hereto to register
the SunTrust shares to be issued in its proposed merger with Wachovia. Investors
and security holders are urged to read the registration statement (when
available) and any other relevant documents filed or to be with the SEC, as well
as any amendments or supplements to those documents, because they contain (or
will contain) important information. Investors and security holders may obtain a
free copy of the registration statement (when available) and such other
documents at the SEC's Internet web site at www.sec.gov. The registration
statement (when available) and such other documents may also be obtained free of
charge from SunTrust by directing such request to: SunTrust Banks, Inc., 303
Peachtree Street, N.E., Atlanta, GA 30308, Attention: Gary Peacock
(404-658-4753).