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 12, 2001
THE FOLLOWING LETTER WILL BE SENT TO WACHOVIA SHAREHOLDERS.
SUNTRUST
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.
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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.
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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
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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.
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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.