- The Washington Times - Friday, July 27, 2001

First Union Corp. and SunTrust Banks Inc. both wanting to buy Wachovia Corp. are putting their dollars into a massive public relations blitz to try to sway the vote by the North Carolina bank's shareholders.

The banks are blanketing newspapers like the Wall Street Journal, New York Times, The Washington Times and The Washington Post and filling the airwaves, while letters and telephone calls are going out to the approximately 150,000 Wachovia shareholders.

"This is a way to get their story out from their perspective in a controlled environment," said Cary Hatch, president of MDB Communications, an advertising agency in the District. "Whether their shareholders buy into that that's a whole different story."

The battling banks could be spending anywhere from $500,000 to $1.2 million to tell their story, estimated Ms. Hatch, who is not working with the companies.

Wachovia is running a television commercial, along with regional print and radio ads, to let its shareholders and customers know the bank supports First Union's offer.

First Union announced plans to buy the Winston-Salem bank in April, and shareholders will vote on the proposal 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. Its offer for Wachovia is currently $14.6 billion, compared with First Union's bid now worth about $14.4 billion.

Last week a judge rejected a request by SunTrust to block First Union's purchase of Wachovia.

Wachovia sent letters earlier this summer to its shareholders urging them to fill out a white proxy card by Aug. 3 supporting the First Union proposal. SunTrust did the same, sending the shareholders a blue proxy card urging them to vote no.

To pass the First Union proposal, Wachovia needs a majority 50 percent plus one share of all of outstanding shares of common stock, not just a majority of the shares that vote. The company had 203 million shares outstanding as of June 30.

Any shareholder who does not return the white card will be counted as voting against the First Union proposal, according to Wachovia's Web site (www.wachovia.com).

"We've generally tried to keep this on the positive side," said David Carroll, executive vice president in charge of merger integration at First Union. "I can't say that about our competitors."

SunTrust, for example, is running a radio ad that spoofs a television ad paid for by Wachovia that claims that Wachovia won't change after the First Union/Wachovia merger. The SunTrust ads points out that bank branches would close and employees be fired if the merger is approved.

"They're trying to make a point and we're trying to make a point in a lighthearted way," said Barry Koling, a SunTrust spokesman.

This kind of behavior is unusual since Southern banks have a reputation of being genteel, observers say.

An advertising battle is common when two sides are trying to get their point across, especially to persuade someone to take a particular action, according to local public relations executives.

"In most fights of this nature, where you have a targeted audience, public relations is a more effective tool," said Tom Hoog, president and chief executive of Hill & Knowlton USA. "It allows you to target your audience in a refined, defined way."

The banking companies have used radio stations in North and South Carolina and are running ads in major daily newspapers like the Wall Street Journal and the New York Times, as well major dailies in North and South Carolina, Virginia, Georgia and Florida the areas where the majority of Wachovia shareholders live.

"Each side is looking to put their proposal in a positive light, we just think our light is brighter," Mr. Koling said. "Our message is simple and consistent: We have a proposal that is superior to the First Union/Wachovia proposal."

First Union and Wachovia would sell 38 branches to resolve antitrust concerns about the deal, the Justice Department said yesterday.

The companies also are trying to explain to their customers what the First Union proposal would mean to them, Mr. Carroll said.

SunTrust created a Web site (www.suntrustwachoviaproposal.com) to give shareholders more information. The site, which has been up for three weeks, has had an average of about 100,000 hits per week, Mr. Koling said.

Wachovia's company Web site has a section dedicated to the First Union offer and urges the shareholders to vote for the deal.

Both SunTrust and First Union have made several mailings to the shareholders, followed up with telephone calls and one-on-one with them to try to persuade them to vote in their favor.

"There's a point where we don't want to be bothersome," Mr. Koling said. "We're generally finding people want information, and the message seems to be resonating."

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