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 13, 2001
The following is a press release issued yesterday by SunTrust
Banks, Inc.
[Logo SunTrust Banks, Inc.]
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
July 12, 2001
SUNTRUST URGES WACHOVIA SHAREHOLDERS TO
EXAMINE FIRST UNION'S TRACK RECORD
ATLANTA, GA - SunTrust Banks, Inc. (NYSE:STI) sent the following
letter to the shareholders of Wachovia Corporation (NYSE:WB) detailing what
SunTrust believes is First Union Corporation's (NYSE:FTU) poor track record
of acquisitions, stock performance and dividend cuts. In the letter,
SunTrust urges Wachovia's shareholders to question the reliability of First
Union's projected performance in light of these facts, and to vote against
the proposed First Union transaction.
The text of the letter follows:
July 12, 2001
Dear Wachovia Shareholder:
For several months now, First Union has touted its proposed merger
with Wachovia, and publicly proclaimed the projected benefits to
shareholders. This is a refrain that First Union's shareholders have heard
from their management many times before. They have learned the hard way
that First Union always says good things about its major acquisitions but,
in reality, these acquisitions rarely -- if ever -- meet First Union's
stated expectations.
Unfortunately, First Union has surprised its shareholders time and
again -- and each time it is First Union's shareholders who have ended up
suffering for management's miscalculations. Since you will be required to
surrender your Wachovia shares in exchange for First Union shares if the
First Union merger is approved and completed, you should know what First
Union shareholders know about their management's inability to foresee what
lies ahead.
CAN YOU AFFORD ANOTHER FIRST UNION "SURPRISE"?
First Union's recent acquisition history is grim. Its record of
integrating acquired companies, we believe, has been poor. Now First Union
asserts that a combination with Wachovia will be different. But all too
often, First Union's shareholders have been unpleasantly surprised.
SURPRISE NO. 1 -- THE FIRST FIDELITY ACQUISITION
In June 1995, First Union announced its proposed acquisition of
First Fidelity Bancorporation, and presented illustrative post-acquisition
1997 earnings per share of $3.62. In fact, First Union's 1997 operating
earnings per share were $3.30 -- 8.8% LESS THAN FIRST UNION PRESENTED WHEN
ANNOUNCING THE ACQUISITION.
******************************************************************************
GIVEN FIRST UNION'S HISTORY OF OVERPREDICTING AND UNDERDELIVERING AS
DETAILED IN THIS LETTER, WE SEE NO REASON FOR WACHOVIA SHAREHOLDERS TO RELY
ON FIRST UNION'S LATEST SET OF OPTIMISTIC PREDICTIONS. PROTECT YOUR
INVESTMENT AND HELP ADVANCE A WACHOVIA-SUNTRUST MERGER BY VOTING AGAINST
THE FIRST UNION MERGER PROPOSAL ( PROPOSAL NO. 1) ON THE ENCLOSED BLUE
PROXY CARD.
WE URGE YOU NOT TO VOTE IN ANY WAY ON WACHOVIA'S WHITE PROXY CARD. IF YOU
PREVIOUSLY VOTED FOR THE FIRST UNION MERGER PROPOSAL, YOU CAN EASILY CHANGE
YOUR VOTE BY SIGNING, DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD.
******************************************************************************
SURPRISE NO. 2 -- THE SIGNET ACQUISITION
In July 1997, First Union announced its proposed acquisition of Signet
Banking Corporation, and presented illustrative post-acquisition 1999
earnings per share of $4.36. First Union missed the mark by a wide margin,
as 1999 operating earnings per share were only $3.40 -- 22% LESS THAN FIRST
UNION PRESENTED WHEN ANNOUNCING THE ACQUISITION.
SURPRISE NO. 3 -- THE CORESTATES ACQUISITION
Still undeterred, First Union plowed ahead with more acquisitions,
and as the acquisitions grew in size, so did the surprises. In November
1997, First Union announced the acquisition of CoreStates Financial Corp.
At the time of announcement, First Union presented illustrative
post-acquisition 1999 earnings per share of $4.46. The acquisition was
completed in April 1998 and significant problems followed. First Union lost
19% of CoreStates customers and suffered major integration problems. First
Union revised its earnings estimates downward twice in 1999, and ultimately
1999 operating earnings per share were only $3.40 -- 23.8% LESS THAN FIRST
UNION PRESENTED WHEN ANNOUNCING THE ACQUISITION.
SURPRISE NO. 4 -- THE 1999 STOCK PRICE DEBACLE
The year 1999 was a very bad year to own First Union stock. At the
start of the year, the IBES median per share earnings estimate was $4.35
and First Union's stock price was $60.81. As First Union kept revising
earnings estimates downward -- disappointing shareholders and Wall Street
-- its stock price plunged. At year-end, First Union's operating earnings
per share were only $3.40, and its stock price was $32.94. This disastrous
decline in the market price of First Union shares COST ITS SHAREHOLDERS
ALMOST HALF THE VALUE OF THEIR INVESTMENT -- OR AN AGGREGATE OF MORE THAN
$26.7 BILLION IN MARKET VALUE -- in just one year. And First Union
shareholders are doing no better today, as First Union's stock closed at
$33.16 on July 11, 2001.
SURPRISE NO. 5 -- THE MONEY STORE ACQUISITION
In June 1998, First Union acquired The Money Store Inc. for $2.1
billion. First Union announced that the acquisition was expected to be
immediately accretive to earnings. But The Money Store acquisition turned
out to be a complete failure and just two years later -- in June 2000 --
First Union announced that The Money Store was being shut down. As we have
cited in prior letters, The Money Store debacle contributed to
restructuring and other charges of $4.9 billion against First Union's
earnings in 2000 -- ONE OF THE LARGEST CHARGES AGAINST EARNINGS IN THE
HISTORY OF CORPORATE AMERICA.
SURPRISE NO. 6 -- THE DIVIDEND IS SLASHED
First Union shareholders have learned that when all these negative
surprises are added up, they can hit shareholders very hard. Faced with
obvious shareholder concern about the future of their First Union dividend
payments, First Union CEO Ken Thompson sought to reassure shareholders. In
referring to First Union's consideration of its dividend rate, Mr. Thompson
was quoted in the press on November 1, 2000 as stating "we've got plenty of
capacity to generate all the capital we need in this company. At the end of
the day, we didn't need to cut the dividend."
And then, only seven weeks later, in what we see as the biggest and
cruelest surprise of all, First Union announced that it was cutting its
dividend rate in half in the first quarter of 2001. THIS DRASTIC DIVIDEND
CUT CAN BE EXPECTED TO COST UNSUSPECTING FIRST UNION SHAREHOLDERS AN
AGGREGATE OF $940,000,000 IN DIVIDEND PAYMENTS THIS YEAR assuming First
Union maintains its current quarterly dividend rate of $0.24 per share
through year-end.
IT'S A QUESTION OF RELIABILITY
Now, with the critical vote on the proposed First Union merger
only 3 weeks away, First Union continues to tout the benefits of the merger
to Wachovia shareholders. First Union, for example, speaks glowingly of the
"New Wachovia" -- which, as we see it, means nothing more than Wachovia
shareholders would become First Union shareholders, with the same
opportunity to experience the unpleasant "surprises" that First Union
shareholders have come to know all too well.
First Union's CEO Ken Thompson, who has been with First Union in
various capacities for 25 years, was a senior executive during all these
unpleasant shareholder surprises. In speaking now of the proposed First
Union merger with Wachovia, Mr. Thompson says: "We believe this merger will
enable us to achieve unusually attractive growth...." IT SOUNDS TO US LIKE
THIS COULD BE SURPRISE NO. 7.
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 a crucial step in securing the benefits of a
proposed merger with SunTrust. Please sign, date and return the enclosed
BLUE proxy card today. Even if you have already voted in favor of the First
Union proposal, it is not too late to change your mind.
THANK YOU FOR YOUR SUPPORT.
Sincerely,
/s/ L. Phillip Humann
L. Phillip Humann
Chairman, President and
Chief Executive Officer
IMPORTANT
If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can sign the BLUE proxy card with respect to
your shares and only after receiving your specific instructions. Please
contact the person responsible for your account and give instructions today
for the BLUE card to be voted AGAINST PROPOSAL 1.
If you have questions in voting your shares, please contact the firm
assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
TOLL-FREE SHAREHOLDER INFORMATION LINE: 1-877-750-9501
Note: Operating earnings per share for 1997 and 1999 are diluted earnings
per share before merger-related and restructuring charges. For 1999,
operating earnings per share also exclude non-recurring-gains. Per share
data is adjusted for stock splits.
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 filed 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 relevant 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, 303 Peachtree
Street, N.E., Atlanta, GA 30308, Attention: Gary Peacock (404-658-4753).
Information concerning additional participants in SunTrust's solicitation
of proxies from Wachovia shareholders was filed by SunTrust with the SEC on
July 12, 2001 on Schedule 14A.
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 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).