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: May 14, 2001
The following is a Memorandum and Q&A distributed to all employees of SunTrust
Banks, Inc. on Monday, May 14, 2001.
MEMORANDUM
[SUNTRUST BANKS, INC. LOGO]
DATE: May 14, 2001
TO: All SunTrust Employees
FROM: Phil Humann
SUBJECT: Important News
Early this morning, SunTrust announced that we have made a proposal to acquire
Wachovia Corporation. This is an important, exciting and positive action by
SunTrust, and one that will be highly visible in our region and nationally.
Accordingly, it is essential that you have a clear understanding of what has
occurred, why, and what it means.
To help answer those questions, accompanying this memo is the text of a SunTrust
press release issued this morning. It outlines the key elements of our proposal
and also includes links to more detailed information. Also attached is a "Q&A"
which should go a long way towards answering questions you may have or that you
may get from customers or friends.
Highlights of today's news are:
o We have delivered a letter directly to Wachovia's Board of Directors
proposing a combination of Wachovia and SunTrust to create an even stronger
Southeastern financial services franchise than either institution enjoys
alone.
o Wachovia and SunTrust are an ideal fit strategically and culturally, and
our proposal is financially compelling.
o We are confident our offer is far superior to the proposed merger plan
involving Wachovia and First Union Corporation that was announced in April
2001. Specifically, we believe our proposal is much more attractive to
Wachovia
shareholders while also serving the interests of our own. It should also be
significantly less disruptive for Wachovia employees and customers. Our own
customers and employees also stand to benefit from the growth opportunities
that would stem from being part of a larger, more diverse organization.
o We are hopeful that the Wachovia Board will perceive the merits of our
proposal and agree to work with us on a plan to quickly implement it.
Completion of our proposed transaction could occur later this year if we
are successful. Of course, this would require the termination of Wachovia's
agreement with First Union.
The process through which all this will be worked out could, however, be a
prolonged one. You should know that seeing it through is a major corporate
priority for SunTrust. As the process unfolds, I urge you to keep two things in
mind:
First, the prospect of a SunTrust-Wachovia combination is very exciting. While
SunTrust has excellent prospects on its own, the combined organization we
envision will have superior financial strength, numerous competitive advantages
and even greater expansion opportunities.
Second, what permits us to make a proposal like this is the relative strength of
our "currency" -- that is, SunTrust stock. As you know, a major factor
influencing our stock price is our earnings performance which, in turn, depends
upon how well we do in executing our sales, efficiency and other
performance-related programs.
The good news is that our operating model provides a framework for SunTrust
managers and employees throughout our organization to keep focused on our 2001
goals, even as a small group of senior managers in Atlanta works to pursue the
SunTrust-Wachovia proposal.
As developments occur we will keep you posted. In the meantime, thank you, as
always, for your interest and support.
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[SunTrust Banks, Inc. Logo]
QUESTIONS & ANSWERS
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1. WHY DOES THIS TRANSACTION MAKE SENSE FOR SUNTRUST?
The combination of SunTrust and Wachovia is a compelling transaction. The
combination will create a Southeastern financial services franchise with
strong positions in seven contiguous high-growth states and a powerful
franchise in key business lines including retail banking, commercial
banking, corporate and investment banking and wealth management. Moreover,
the companies have complementary cultures and both share a commitment to
their local markets, service quality and relationship-based banking.
2. WHY ARE WE MAKING THIS OFFER NOW?
We are making this offer now because, as noted in our press release, we
believe it offers far superior value to both Wachovia and SunTrust
shareholders than the proposed First Union transaction that was announced
last month.
3. HOW EXACTLY IS SUNTRUST'S PROPOSAL SUPERIOR TO FIRST UNION'S PROPOSAL
FOR WACHOVIA?
For Wachovia shareholders, they would get a higher price (17% premium over
the current value of the First Union transaction, based on May 11, 2001
closing stock prices) in a better-performing security as well as a bigger
dividend from a better-capitalized company. Employees would benefit from a
simpler integration process and by being part of a stronger organization.
Customers should experience less disruption, and many communities would
face fewer job losses and branch closings, especially in the Carolinas
where SunTrust does not currently operate retail branches.
4. WHAT HAPPENS NEXT?
The Wachovia Board considers our offer. We hope they recognize it as a
superior proposal and agree to meet with us to negotiate an agreement and
develop specific merger integration plans.
5. WHAT IF WACHOVIA REJECTS THE OFFER?
Our answer to "what-if" questions is this: We believe we've made a
compelling proposal that provides superior value to Wachovia shareholders.
We firmly believe in the strength of a SunTrust-Wachovia combination, and
we are prepared to take the necessary steps to complete a transaction.
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6. HOW LONG COULD THIS GO ON?
We just can't say, as there are a number of variables. We strongly prefer a
negotiated transaction that could be consummated quickly.
7. IF THIS DOES GO ON FOR A LONG TIME, IS THERE A RISK IT WILL DIVERT
MANAGEMENT ATTENTION FROM OUR OTHER PRIORITIES?
It will actually be a fairly small team that will focus on this proposed
transaction. Under our operating model, managers and employees throughout
the organization will continue to focus on serving customers and
implementing our sales, efficiency and other programs at the same high
standards as always.
8. IF WE FAIL TO COMPLETE THIS DEAL, WHAT DOES IT MEAN FOR SUNTRUST?
While the SunTrust-Wachovia combination would certainly accelerate our
growth strategy, SunTrust is in great shape, with an extremely strong
franchise, leading positions in its markets, and excellent performance and
growth prospects on our own.
9. ARE WE CONCERNED ABOUT OTHER BIDDERS? WHO ELSE MIGHT JUMP IN?
We're confident that we've made a compelling proposal that would provide
superior value to Wachovia shareholders. Moreover, we firmly believe that
SunTrust is the most logical candidate to combine with Wachovia. Beyond
that, we can't speculate on what may or may not happen.
10. WHAT DOES THIS MEAN FOR SUNTRUST'S EARNINGS?
The transaction is expected to be slightly accretive to SunTrust's earnings
per share in 2002, excluding one-time merger-related charges, and
increasingly accretive thereafter.
11. HOW WILL THE PROPOSED MERGER INTEGRATION WORK?
Integration details would be worked out in a finalized integration plan we
would hope to develop in concert with Wachovia. Until then, we are unable
to provide a lot of specifics. That said, SunTrust is assuming a
conservative implementation plan based on the highly successful Crestar
merger, with an emphasis on customer and revenue retention, as well as
maintaining customer service quality standards during systems conversions.
We are confident we can integrate SunTrust's and Wachovia's complementary
and overlapping businesses without the customer disruption and other
problems that often accompany large bank mergers.
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12. WHAT WILL BE THE COMBINED ENTITY'S NAME? ITS HEADQUARTERS? ITS CEO?
The combined entity will be SunTrust. The combined company would be
headquartered in Atlanta, and Winston-Salem would become the headquarters
for our new Carolinas banking franchise. SunTrust CEO Phil Humann would be
CEO in the combined company.
13. WHAT DOES THIS TRANSACTION MEAN FOR CUSTOMERS?
Our proposal has no immediate impact on customers. Looking ahead, both
SunTrust and Wachovia share a strong customer focus; we believe bringing
together these two leading players in the Southeast market will deliver
additional value to customers of both companies. We will have an even
stronger organization, with a full range of products to meet customers'
current needs and enhanced resources to permit greater investment in new
product development.
14. WILL THERE BE BRANCH CLOSINGS?
At this point, we anticipate consolidation of between 150-175 branches out
of a total of approximately 1,800. Pending finalization of integration
plans, it's premature to comment on specific locations. Minimizing customer
inconvenience and redeploying branch employees will be primary
considerations in making these decisions.
15. WILL THERE BE EMPLOYEE LAYOFFS? IF SO, HOW MANY EMPLOYEES WILL BE
AFFECTED, IN WHAT LOCATIONS, AND WHEN?
In a proposed SunTrust/Wachovia combination, we anticipate eliminating far
fewer than the 7,000 jobs to be lost under the proposed First Union merger.
As with other integration-related issues, it is far too early to discuss
specific locations, functions or timing. We can say, however, that we would
expect attrition to account for a good part of any job eliminations. For
those employees whose jobs are impacted by the merger, we are committed to
providing competitive severance and job-seeking support.
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Note: The following notice is included to meet certain legal requirements:
On May 14, 2001 SunTrust Banks, Inc. filed with the Securities and Exchange
Commission a preliminary proxy statement for solicitation of proxies from
Wachovia Corporation stockholders in connection with the Wachovia 2001 annual
meeting of stockholders. Subject to future developments, SunTrust intends to
file with the SEC a registration
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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 Banks, Inc., 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 on Schedule 14A, filed with the SEC on May 14, 2001.
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