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 25, 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 a merger between
SunTrust Banks, Inc. 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).
THE FOLLOWING IS THE TEXT OF AN AUDIO PRESENTATION BY SUNTRUST CHAIRMAN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER PHIL HUMANN THAT WILL BE MADE
AVAILABLE TO THE RETAIL BROKERAGE DEPARTMENTS OF SELECTED FINANCIAL
INSTITUTIONS.
o Thank you for your time and thanks to [name of financial institution]
for the opportunity to speak to you today. I'm Phil Humann the CEO of
SunTrust. As I am sure you're aware from the recent barrage of
advertisements and other media attention, in May, SunTrust made an
offer to acquire Wachovia. Wachovia, as I am sure you are also aware,
has signed a merger agreement with First Union. The Wachovia
shareholders, including those who own approximately [number] shares in
your retail system as of the June 12 record date, will vote for or
against the First Union merger at an upcoming shareholders meeting on
August the 3rd. I'm here today to provide you with additional
information on SunTrust and our proposal so that you will have better
information in the event that your clients consult you regarding their
investment decision on the First Union merger vote.
o Now, since SunTrust mailed its proxy statement on June 23 and Wachovia
and First Union mailed their proxy on June 30th, there's been no
shortage of communication - dueling press releases, competing ads,
multiple mailings, meetings with shareholders, lots and lots of phone
calls - from both sides.
o I know this is the way these things are done, but I sometimes think the
volume of communication can actually obscure what at the end of the day
is a fairly simple choice for your Wachovia shareholder clients: Should
they vote Against or For the First Union merger.
o We believe shareholders should consider an Against vote for two
principal reasons: First, we believe SunTrust's offer is financially
superior, and, second, we believe the number of First Union shares
being offered is not enough to compensate Wachovia shareholders for the
additional risk of owning First Union stock.
o We are proposing to pay 1.081 shares of SunTrust stock for each share
of Wachovia--As of the July 23rd close, this was a $3.92 or about a
5.6%, premium over the First Union offer.
o We've been talking to a lot of Wachovia shareholders over the past
several weeks, some of them probably your clients. And a number of key
issues have surfaced in those conversations. Price is an issue to be
sure,
and the reality is that we do have the better price. But shareholders
are focused on these important issues as well:
o First of all, the Dividend: This is a very important issue. Our
proposal is very simple: we will raise SunTrust's annual dividend to
$2.22 per share so that on a pro forma equivalent basis Wachovia
shareholders will continue to receive the $2.40 annual dividend they
are receiving today, and that their dividend will grow as the SunTrust
dividend grows. First Union's proposal, on the other hand, is
complicated: They offer First Union's common dividend ($1.92 on a pro
forma equivalent basis) and a choice of either a one time payment of
$.48 per share or what they call a Dividend Equalization Preferred
Share which when coupled with the First Union common dividend
aggregates to a dividend of $2.40 per share --the dividend and the DEP
combined are capped at $2.40 until First Union's common dividend grows
from $1.92 to $2.40, or 25%. For example if First Union (which
currently has a five-year compounded annual dividend growth rate of
negative 2%) grows its dividend at 6% per annum beginning in 2003, it
will take until 2006 before Wachovia shareholders see any dividend
growth out of the First Union transaction. As opposed to First Union's
dividend, which is complex and also very recently was cut in half,
SunTrust's dividend is simple and has increased every year since the
company's formation in 1985.
o Now let's talk about the Strength of the Currency: Here we believe the
issue is each company's long term track record of performance. Looking
at the 5 key metrics over the last 5 years SunTrust's results are
clearly better than First Union's
Stock price: SunTrust, up 39%; First Union, down 7%,
Core EPS: SunTrust, up 75%; First Union, down 16%,
Net Revenue per share: SunTrust, up 53%; First Union, up 3%,
Dividend: SunTrust, up 93%; First Union, down 13%,
and finally,
Book Value per Share: SunTrust, up 23%; First Union, down 5%
o Now, SunTrust has continued this momentum and relative out performance
in 2001. Looking at the 2nd quarter of 2001 over the 2nd quarter of
last year, SunTrust's results, again, are clearly superior
Net Interest Income SunTrust, up 7%, First Union, down 10%
Non Interest Income SunTrust, up 12%, First Union, down 7%
Net Income SunTrust, up 9%, First Union, down 9%,
and finally
Earnings Per Share SunTrust, up 13%, First Union, down 10%
o Now let's talk about Risk: First Union's aggressive appetite for risk
is inconsistent with most Wachovia shareholder investment goals. First
Union's restructuring is not yet complete. They've had volatile
earnings over the past five years and their business mix continues to
be high risk--with a venture capital portfolio that comprised almost
20% of First Union's equity as of December 31, 2000.
o How about Merger Integration Plans?: What are the differences in terms
of cost cutting, branch closings and job cuts and what does it mean for
a smooth merger integration? Our merger proposal is not based on
aggressive cost savings assumptions. We have assumed only 4,000 job
losses versus their 7,000, and only 150 to 175 branch closures versus
their 325. First Union also has a history of destroying shareholder
value in its prior acquisitions: in many cases, First Union's actual
earnings per share have fallen short of their estimates on the deal
announcement dates.
o Now, since May 14, our story - and our proposal -- haven't changed. We
continue to believe that a SunTrust/Wachovia combination is the one
that makes the most sense. Our two banks share a common culture, a
common client profile, and complementary geographies. Like Wachovia, we
are a relationship-focused bank, not a transaction-focused one like
First Union. SunTrust's track record of creating long term growth for
shareholders is similar to that of Wachovia and both are far superior
to First Union's.
o The recent court decision from the North Carolina Business Court opened
the door for Wachovia to negotiate a merger with SunTrust or any other
interested party as soon as the First Union merger agreement is voted
down by the Wachovia shareholders. A rejection of the First Union
merger may lead to proposals from other banks that are superior to the
low-premium First Union offer. Of course, it is our hope that Wachovia
shareholders determine that SunTrust has the most to offer them.
Terminating the First Union agreement is the best way for Wachovia to
maximize value for its shareholders as it will allow Wachovia to
explore all its alternatives, not just a low premium deal from First
Union.
o We've spelled out our position on these matters in our proxy statement,
in letters that have been sent to your clients and in presentations
that are available on our website: www.suntrustwachoviaproposal.com.
Questions may be directed to our proxy solicitors, Innisfree M&A at
Toll Free 1-877-750-9501. Again, thanks for your time today.