- The Washington Times - Saturday, August 4, 2001

Wachovia Corp. shareholders yesterday approved a $14.7 billion takeover deal with First Union Corp. putting a stop to an unsolicited bid from rival SunTrust Banks Inc.

SunTrust, based in Atlanta, conceded and withdrew its $15.6 billion offer for the Winston-Salem, N.C., bank after the preliminary votes were tallied at Wachovia's shareholder meeting in Winston-Salem.

"Based on preliminary results, it does appear all three proposals on agenda have been approved by a significant margin," Wachovia Chairman and Chief Executive Officer L.M. Baker Jr. told shareholders, who also were selecting bank directors and approving auditors.

The Wachovia-First Union combination will create the fourth-largest U.S. bank and the biggest in the Southeast behind Bank of America Corp.

The bank, which will retain the name Wachovia Corp., will have total assets of $324 billion and a market capitalization of $45 billion. The headquarters of the combined companies will be in Charlotte, N.C. It will have 19 million customers and 90,000 employees.

First Union has some 2,100 bank branches in the District and in 11 states along the East Coast. Wachovia has more than 650 offices, mostly in Virginia, the Carolinas, Florida and Georgia.

"We would concede they have won," said SunTrust Vice Chairman Theodore J. Hoepner. "We would not agree it was a significant margin. It was a slim margin."

Mr. Baker did not give a numerical tally of the proxy votes and said the vote count won't be official for two to three weeks.

The board of directors at Charlotte-based First Union and Wachovia already had approved the deal, announced in April. First Union's shareholders voted in favor of the proposal earlier this week.

Wachovia shareholders had until yesterday to cast proxy votes on the offer from First Union.

For the past three months, Wachovia's 150,000 shareholders have been inundated with advertising trying to sway them to vote for or against the First Union-Wachovia deal. The advertising blitz which included full-page ads, television commercials, letters and phone calls, cost the banks millions of dollars.

"We're closing this chapter and moving on," Mr. Hoepner said. "The material issue is they have won."

"We put forward a proposal that we believed to be attractive to Wachovia shareholders and importantly added value for SunTrust shareholders," said L. Phillip Humann, chairman, president and chief executive of SunTrust.

"Clearly we would have preferred a different outcome to this contest," he said.

Some analysts say that SunTrust's bid has made the bank a target for other companies to take over.

"By just making a bid for Wachovia [SunTrust] is saying it really needs an acquisition," said James Ellman, a portfolio manager at Merrill Lynch Investment Management. "The company is a bit more vulnerable to a takeover bid now than it was six months ago."

SunTrust shares rose 45 cents on the New York Stock Exchange yesterday to $69.93. Also trading on the New York Stock Exchange, First Union shares rose 11 cents to $35.55 while Wachovia's shares increased 27 cents to $71.49.

* This article is based in part on wire service reports.

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