- The Washington Times - Saturday, July 21, 2001

GREENSBORO, N.C. (AP) A judge refused yesterday to block First Union Corp.'s purchase of Wachovia Corp., rejecting a request by rival suitor SunTrust Banks Inc.

"The court is convinced that, after a vigorous proxy fight, the shareholders of Wachovia can make an uncoerced, fully informed decision about whether or not they wish to approve the merger with First Union," North Carolina Business Court Judge Ben Tennille wrote.

Judge Tennille did, however, reject as "invalid and unenforceable" a non-termination clause in the Wachovia-First Union deal that would block Wachovia from merging with another bank for several months if the agreement with First Union falls through.

The 64-page ruling could be a major blow to SunTrust in its unsolicited attempt to buy Wachovia, based in Winston-Salem, N.C. But representatives of all three companies said they were pleased with aspects of the ruling.

Wachovia and First Union announced their planned marriage in April, and shareholders are to vote on the plan Aug. 3. SunTrust's rival, unsolicited bid was made in May.

At the time, SunTrust's offer was 17 percent higher than First Union's. The gap has narrowed sharply in recent weeks as SunTrust shares have fallen, and its offer for Wachovia is currently $14.6 billion, compared with First Union's bid now worth about $14.4 billion.

Barry Koling, a spokesman for SunTrust, based in Atlanta, said the judge's position on the non-termination clause was a positive move.

"We're fundamentally pleased today," he said, and the ruling "removes shackles from Wachovia shareholders."

He said no decision has been made on an appeal.

Wachovia issued a statement saying it was "extremely pleased" with the ruling and that it "clears the way for our shareholders to express their views by voting on the merger" next month.

First Union, based in Charlotte, N.C., also applauded the ruling.

Shares of First Union rose 9 cents to close at $35 on the New York Stock Exchange. SunTrust stock rose 51 cents to $68.50, and Wachovia shares rose 4 cents to $70.04.

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