: Tuesday July 31 12:06 PM ET
: First Union Holders Approve Wachovia Deal

Friday August 3 4:05 PM ET

First Union Wins Battle for Wachovia

By James Pierpoint

WINSTON-SALEM, N.C. (Reuters) - Wachovia Corp. declared victory on Friday as shareholders backed its $14.4 billion proposed merger with First Union Corp., ending a bitter takeover battle for the Southeast regional bank with rival suitor SunTrust Banks Inc.

Wachovia Chairman L.M. ``Bud'' Baker said shareholders in preliminary results approved its merger with First Union by a wide margin, siding with company executives in rejecting SunTrust's $15.2 billion hostile takeover bid.

``We think it's a substantial margin, and we would say something in the margin of three to one,'' Baker said of the results after presiding over a standing-room-only meeting of about 1,000 shareholders in Winston-Salem, North Carolina.

The takeover, billed as a merger of equals even though First Union shareholders will control 70 percent of total shares, will form the fourth-largest U.S. banking company and the largest bank in the Southeast.

SunTrust Vice Chairman Ted Hoepner conceded defeat after the meeting, and said the Atlanta-based banking company received the strongest support for its bid from retail investors.

Hoepner shook his head when asked why institutional investors refused to vote down the First Union merger -- which was valued about $800 million less than SunTrust's unsolicited bid -- and said the bank would not contest the results.

``It's back to the business of banking,'' said Hoepner, who during the takeover battle had filed suit on behalf of SunTrust that forced Wachovia to release its shareholder list as the banks sought support for their rival bids from Wachovia's 140,000 shareholders.

MERGER EXPECTED TO CLOSE SEPT. 1

Wall Street analysts had expected First Union to prevail in the bitter takeover fight for Wachovia, which after about two weeks of intense negotiations in April announced a friendly merger with
First Union that it said would produce more savings and generate stronger revenues than a merger with SunTrust.

The North Carolina banks expect to close their merger on Sept. 1, and in the third quarter begin posting the first of $1.4 billion in merger-related charges. The companies expected to generate $890 million in cost savings as they integrate operations over the next three years.

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