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: June 19, 2001
The following is a letter that will be sent to Wachovia shareholders.
[SUNTRUST LOGO]
June 14, 2001
Dear Wachovia Shareholder:
SunTrust has proposed a business combination with Wachovia that we believe
is superior to Wachovia's proposed merger with First Union. You will soon be
receiving information from Wachovia and First Union about their proposed merger.
WE URGE YOU TO DO NOTHING WITH THEIR PROXY MATERIALS UNTIL YOU HAVE READ THE
SUNTRUST PROXY MATERIALS, WHICH YOU WILL BE RECEIVING SHORTLY, AND HAVE
CONSIDERED THE SUNTRUST MERGER PROPOSAL.
Under our proposal, Wachovia and SunTrust would combine in a merger in
which each Wachovia share would be converted into 1.081 shares of SunTrust.
SunTrust also would increase its annual dividend to $2.22 per share so that
Wachovia shareholders would receive on a pro forma basis the same $2.40 annual
per share dividend that they currently enjoy. WE BELIEVE THE SUNTRUST PROPOSAL
IS A BETTER DEAL FOR ALL OF WACHOVIA'S CONSTITUENCIES: SHAREHOLDERS, CUSTOMERS,
EMPLOYEES AND THE COMMUNITIES WACHOVIA SERVES.
SUNTRUST'S VISION:
A SUPERIOR DEAL, A SUPERIOR BANK
We believe that our merger proposal is superior to the First Union proposal
in a number of respects, including the stronger currency - SUNTRUST SHARES -
that we are offering. Consider the following:
o PERFORMANCE. Through March 31, 2001, SunTrust produced one-year, five-year
and ten-year total returns to stockholders (with reinvestment of dividends)
of 15.3%, 98.2% and 493.0%, respectively. For the same periods, First Union
produced returns of NEGATIVE 6.2% and 31.1% and 376.5%. The numbers speak
for themselves.
o DIVIDEND. SunTrust has a history of consistent growth in its dividend. WE
HAVE INCREASED OUR PER SHARE DIVIDEND EVERY YEAR FROM 1996 TO 2001. Over
that period (annualizing our first quarter 2001 dividends), our dividend
increases represent a compounded annual growth rate of 14%. In sharp
contrast, First Union recently CUT its per share dividend by 50% in the
first quarter of this year.
o FINANCIAL STRENGTH AND SUPERIOR CREDIT QUALITY. As of March 31, 2001,
SunTrust had a tangible common equity ratio, an important measure of
capital strength, of 6.8%, well above First Union's tangible common equity
ratio of
5.0%. As of March 31, 2001, SunTrust's net charge-off ratio and
non-performing asset ratio, two key measures of credit quality, were .38%
and .52%, respectively - markedly superior to First Union's .53% and 1.3%.
o GROWTH. Based on historical results and consensus analyst estimates for
2001, SunTrust's core EPS reflects a compounded annual growth rate of 12%
from 1996-2001 (adjusted for stock splits and excluding restructuring and
merger-related charges and other non-recurring items). In contrast, First
Union's core EPS has a five-year compounded annual growth rate of NEGATIVE
4% on the same basis.
When we envision the combination of SunTrust and Wachovia, we see the
premier financial services franchise in the Southeast, with a strong, vibrant
presence in seven contiguous, high-growth states, including #1 MARKET POSITIONS
IN GEORGIA, SOUTH CAROLINA AND VIRGINIA based on customer deposits. The
foundation for this vision is the three pillars of our business - our customers,
our employees and our communities - all of whom we believe will come out ahead
under our proposal.
We also strongly believe our merger proposal is better for North and South
Carolina. A COMBINED SUNTRUST/WACHOVIA WILL ELIMINATE 3,000 FEWER JOBS THAN
FIRST UNION AND CLOSE 125 TO 150 FEWER BRANCHES THAN FIRST UNION INCLUDING NO
MERGER-RELATED BRANCH CLOSINGS IN NORTH AND SOUTH CAROLINA. We believe that
fewer job losses and fewer branch closings unquestionably provide a solid
foundation for our goal of building the premier financial services franchise in
the Southeast.
We strongly believe that the proposed First Union/Wachovia transaction is
not in your financial best interest. We will soon send you proxy materials that
will provide you with additional information about our merger proposal,
accompanied by a BLUE proxy card. We will be soliciting proxies to vote AGAINST
the proposed First Union/Wachovia merger at the Wachovia Annual Meeting. Defeat
of the First Union merger proposal is a CRITICAL FIRST STEP TOWARD PROVIDING YOU
WITH THE OPPORTUNITY TO CONSIDER THE SUNTRUST MERGER PROPOSAL.
DON'T EXPECT FIRST UNION OR YOUR BOARD OF DIRECTORS
TO PROTECT YOUR INTERESTS
With the active support of Wachovia's management, First Union recently
engineered an eleventh-hour change to North Carolina law in an attempt to
disadvantage SunTrust's merger proposal. This change will have the effect of
preventing the shareholders of Wachovia from ever having the ability to call a
special meeting of shareholders, including for the purpose of electing directors
who support a transaction that is superior to the First Union merger, unless
first approved by Wachovia's Board of Directors. Rather than improving the terms
of its proposal, First Union, with the active support of Wachovia, has used its
political advantage to disenfranchise Wachovia shareholders in an attempt to
coerce you to support the First Union proposal.
So don't be misled by Wachovia management's attempts to characterize our
merger proposal as "hostile." Our merger proposal is designed to provide you
with a superior alternative to the proposed merger with First Union. How can
that be "hostile" to you?
------------
YOUR VOTE AGAINST THE FIRST UNION/WACHOVIA MERGER IS THE CRUCIAL FIRST STEP
TO SECURING THE BENEFITS OF THE SUNTRUST MERGER PROPOSAL. Send a strong message
to the Wachovia board by voting AGAINST the First Union merger proposal. Your
vote is important no matter how many or how few shares you may own.
Thank you for your support.
Sincerely,
/s/ L. Phillip Humann
L. Phillip Humann
Chairman, President and
Chief Executive Officer
================================================================================
IMPORTANT
If you have any questions, please contact the firm assisting us in this effort:
INNISFREE M&A INCORPORATED
TOLL-FREE SHAREHOLDER
INFORMATION LINE: 1-877-750-9501
================================================================================
On June 12, 2001 SunTrust filed with the Securities and Exchange Commission
("SEC") a revised preliminary proxy statement for solicitation of proxies from
Wachovia stockholders in connection with the Wachovia 2001 Annual Meeting of
stockholders (the "Preliminary Proxy Statement"). 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 the proposed transaction. Investors and security holders are urged to read
the proxy statement and registration statement (when available) and any other
relevant documents 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 proxy
statement and the registration statement (when available) and other relevant
documents at the SEC's Internet web site at www.sec.gov. The proxy statement,
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). SunTrust, its directors and executive officers and certain other
persons may be deemed to be "participants" in SunTrust's solicitation of proxies
from Wachovia stockholders. A detailed list of the names, affiliations and
interests of the participants in the solicitation is contained in SunTrust's
Preliminary Proxy Statement.
This letter contains 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 the anticipated results or other
expectations expressed in the forward-looking statements can be found in
SunTrust's Preliminary Proxy Statement and 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 SEC and available at the SEC's Internet site
(http://www.sec.gov).