Filed by First Union Corporation
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: May 22, 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
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", "projects" 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 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 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 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 First Union or Wachovia or any person acting on
their behalf are expressly qualified in their entirety by the cautionary
statements 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.
The proposed transaction will be submitted to First Union's and
Wachovia'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 First Union and Wachovia 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 First Union and Wachovia, 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, Investor Relations, One First Union Center,
Charlotte, North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor
Relations, 100 North Main Street, Winston-Salem, North Carolina 27150
(888-492-6397).
First Union and Wachovia, and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from
the stockholders of First Union and Wachovia in connection with the merger.
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. 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. 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.
THE FOLLOWING ARE ADVERTISEMENTS THAT RAN IN VARIOUS NATIONAL AND REGIONAL
PUBLICATIONS ON MAY 22, 2001
[FIRST UNION LOGO APPEARS HERE]
There are two different ways to
combine financial institutions.
Which do you prefer?
Hostile Takeover
----------------
SunTrust's hostile takeover of Wachovia will lead to:
1. Gutting Wachovia: the name, management, and culture will disappear;
disruptions and uncertainties will hurt shareholder value, employee morale,
and customer loyalty.
2. No scale, low capital ratios and an inferior loan portfolio mix.
3. Inferior earnings per share (EPS) growth to Wachovia shareholders of only 1%
in 2002, 5% in 2003, and 9% in 2004, with uncertain growth prospects.
4. A questionable deal for SunTrust shareholders at the expense of Wachovia
shareholders: SunTrust shareholders will get $190 million more each year in
dividends, which represents the Wachovia shareholders' $140 million share of
proposed cost savings plus a $50 million tip for SunTrust shareholders.
5. No net capital creation from cost savings for more than ten years: no
cushion for economic downturns, and limited additional capital for
investment.
6. Management with no experience with large-scale, in-market integration.
Strategic Partnership
---------------------
First Union's strategic partnership with Wachovia will lead to:
1. Seamless integration of two North Carolina institutions with similar
cultures and a shared vision of the future of banking.
2. A superior franchise with the capital and balance sheet strength to compete
and grow: $324 billion in assets, fourth in the U.S.; $183 billion in
deposits, second nationwide; strong mutual fund, cash management, brokerage,
insurance, and international banking businesses.
3. Greater value to shareholders:
o At least $15 per share greater long-term value to Wachovia shareholders
through higher internal rates of return.(1)
o EPS is 15% higher in 2002, 17% in 2003, and 20% in 2004.
4. The exact same dividend as SunTrust would pay through 2004 (on a present
value basis), with a year's worth of dividends paid in advance, plus all of
the upside growth of a preeminent U.S. financial institution.
5. Net capital creation from cost savings in three years.
6. An experienced integration team that has converted more than 2,000 systems
and 4,000 branches to state-of-the-art technology platforms in the last 17
years.
First Union and Wachovia
The Right Combination
(1) Note: IRR and present value per share analysis assume earnings, synergy, and
balance sheet growth assumptions as per each company's investor presentation.
Modeling assumptions are identical and based on an 11x terminal multiple and a
13% discount rate (for present value per share analysis only).
In connection with the proposed transaction with Wachovia, on April 26, 2001,
First Union filed a registration statement on Form S-4 with the Securities and
Exchange Commission containing a preliminary joint proxy statement/prospectus of
First Union and Wachovia. Stockholders are urged to read the definitive joint
proxy statement/prospectus regarding the proposed transaction when it becomes
available and any other relevant documents filed with the SEC because they will
contain important information.You may obtain a free copy of the registration
statement and the joint proxy statement/prospectus,without charge,at the SEC's
Internet site (http://www.sec.gov).Copies of these documents 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 director and officer participants in the proxy solicitation and a
description of their direct and indirect interest, by security holdings or
otherwise, is contained in the proxy materials filed with the SEC by First Union
on March 13, 2001, and by Wachovia on March 19, 2001.The information presented
above may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Factors that could cause actual
results to differ materially from those described in the forward-looking
statements can be found in First Union's and Wachovia's public reports filed
with the SEC.
[FIRST UNION LOGO APPEARS HERE]
There are two different ways to
combine financial institutions.
Which do you prefer?
Hostile Takeover
----------------
SunTrust's hostile takeover of Wachovia will lead to:
1. Gutting Wachovia: the name, management, and culture will disappear;
disruptions and uncertainties will hurt shareholder value, employee morale,
and customer loyalty.
2. No scale, low capital ratios and an inferior loan portfolio mix.
3. Inferior earnings per share (EPS) growth to Wachovia shareholders of only 1%
in 2002, 5% in 2003, and 9% in 2004, with uncertain growth prospects.
4. A questionable deal for SunTrust shareholders at the expense of Wachovia
shareholders: SunTrust shareholders will get $190 million more each year in
dividends, which represents the Wachovia shareholders' $140 million share of
proposed cost savings plus a $50 million tip for SunTrust shareholders.
5. No net capital creation from cost savings for more than ten years: no
cushion for economic downturns, and limited additional capital for
investment.
6. Management with no experience with large-scale, in-market integration.
Strategic Partnership
---------------------
First Union's strategic partnership with Wachovia will lead to:
1. Seamless integration of two institutions with similar cultures and a shared
vision of the future of banking.
2. A superior franchise with the capital and balance sheet strength to compete
and grow: $324 billion in assets, fourth in the U.S.; $183 billion in
deposits, second nationwide; strong mutual fund, cash management, brokerage,
insurance, and international banking businesses.
3. Greater value to shareholders:
o At least $15 per share greater long-term value to Wachovia shareholders
through higher internal rates of return.(1)
o EPS is 15% higher in 2002, 17% in 2003, and 20% in 2004.
4. The exact same dividend as SunTrust would pay through 2004 (on a present
value basis), with a year's worth of dividends paid in advance, plus all of
the upside growth of a preeminent U.S. financial institution.
5. Net capital creation from cost savings in three years.
6. An experienced integration team that has converted more than 2,000 systems
and 4,000 branches to state-of-the-art technology platforms in the last 17
years.
First Union and Wachovia
The Right Combination
(1)Note: IRR and present value per share analysis assume earnings, synergy, and
balance sheet growth assumptions as per each company's investor presentation.
Modeling assumptions are identical and based on an 11x terminal multiple and a
13% discount rate (for present value per share analysis only).
In connection with the proposed transaction with Wachovia, on April 26, 2001,
First Union filed a registration statement on Form S-4 with the Securities and
Exchange Commission containing a preliminary joint proxy statement/ prospectus
of First Union and Wachovia.Stockholders are urged to read the definitive joint
proxy statement/prospectus regarding the proposed transaction when it becomes
available and any other relevant documents filed with the SEC because they will
contain important information. You may obtain a free copy of the registration
statement and the joint proxy statement/prospectus, without charge, at the SEC's
Internet site (http://www.sec.gov). Copies of these documents 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 director and officer participants in the proxy solicitation and a
description of their direct and indirect interest, by security holdings or
otherwise, is contained in the proxy materials filed with the SEC by First Union
on March 13, 2001, and by Wachovia on March 19, 2001.The information presented
above may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Factors that could cause actual
results to differ materially from those described in the forward-looking
statements can be found in First Union's and Wachovia's public reports filed
with the SEC.
THE FOLLOWING NEWS RELEASE WAS ISSUED BY FIRST UNION CORPORATION ON MAY 22, 2001
[FIRST UNION LOGO APPEARS HERE]
Tuesday Media Contacts:
May 22, 2001 Mary Eshet 704-383-7777
Ginny Mackin 704-383-3715
Investor Contact:
Alice Lehman 704-374-4139
FIRST UNION TO GUARANTEE CURRENT WACHOVIA DIVIDEND OF $2.40
TO WACHOVIA SHAREHOLDERS
No Additional Cost for First Union Shareholders
Charlotte, N.C. - First Union Corp.[NYSE:FTU] said today that, as part of its
agreement to merge with Wachovia Corp. [NYSE:WB], it will offer all Wachovia
shareholders two attractive alternatives to guarantee that their dividend
payments will remain at the current Wachovia level of $2.40 per annum.
"We want to make it crystal clear to Wachovia shareholders that we will maintain
their dividend," said Ken Thompson, chairman and chief executive officer of
First Union.
"From our perspective, either of these two options is economically the same with
no additional cost to First Union shareholders. We simply want to provide
Wachovia shareholders a choice of how and when they want to receive their
dividends."
The two alternatives for payment and timing are:
1) As previously announced, a one-time payment at closing of $0.48 per
Wachovia share designed to equal the difference between Wachovia's
current dividend of $2.40 and the anticipated future dividends for the
new company.
Or:
--
2) Issuance of preferred shares to Wachovia shareholders guaranteeing
the payment, every quarter, of the difference between Wachovia's
current dividend and the common stock dividend of the new company. It
is simple and easy for Wachovia's shareholders: They will continue
receiving a minimum of $0.60 per quarter.
First Union anticipates that the value of these preferred shares is
approximately $0.48 per Wachovia share based upon financial projections
for the merged company and a dividend payout ratio of 33 percent of
cash earnings.
"With this option, First Union's clearly superior offer to Wachovia shareholders
is made even more compelling," said Thompson.
Details of preferred stock alternative:
In addition to two shares of First Union common stock, Wachovia shareholders who
elect this alternative will receive two shares of preferred stock for each share
of Wachovia common stock currently owned. Dividends on the preferred stock would
be initially set at $0.06 per share (based on First Union's current $0.24 per
share dividend), payable quarterly, delivering current Wachovia shareholders
$0.12 quarterly. This represents the difference between Wachovia's current
quarterly dividend of $0.60 and First Union's current quarterly dividend rate,
adjusted for the 2-for-1 exchange ratio. Dividends on the preferred stock would
decline as the new institution's common dividend increases, but would be paid
out indefinitely until the new institution's common dividend equals or exceeds
$1.20, or $2.40 per current Wachovia share, as adjusted for the 2-for-1 exchange
ratio.
First Union (NYSE:FTU), with $253 billion in assets and stockholders' equity of
$16 billion at March 31, 2001, is a leading provider of financial services to 15
million retail and corporate customers throughout the East Coast and the nation.
The company operates full-service banking offices in 11 East Coast states and
Washington, D.C., and full-service brokerage offices in 47 states and
internationally. Online banking products and services can be accessed through
www.firstunion.com.
This news release may contain 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 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 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 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 results to differ materially from those
described in the forward-looking statements can be found in 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 First Union or any person acting on its behalf
are expressly qualified in their entirety by the cautionary statements above.
First Union 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.
Additional Information
The proposed transaction will be submitted to First Union's and Wachovia'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 First Union and Wachovia 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 First Union and Wachovia, 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, Investor Relations, One First Union Center, Charlotte,
North Carolina 28288-0206 (704-374-6782), or to Wachovia, Investor Relations,
100 North Main Street, Winston-Salem, North Carolina 27150 (888-492-6397).
First Union and Wachovia, and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
stockholders of First Union and Wachovia in connection with the merger.
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. 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. 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.