SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 20, 1997
---------------------------
FIRST UNION CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 1-10000 56-0898180
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First Union Center
Charlotte, North Carolina 28288-0013
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704)374-6565
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
On August 20, 1997, First Union Corporation (the "Corporation") entered
into an Agreement and Plan of Merger (the "Acquisition Agreement"), which
provides, among other things, for the acquisition (the "Acquisition") of
Wheat First Butcher Singer, Inc. ("WFBS") by the Corporation.
A copy of a news release (the "News Release") relating to the
Acquisition is being filed as Exhibit (99)(a) to this report, and such News
Release is incorporated herein by reference.
Exhibit 99(b) hereto contains certain materials used by the Corporation
in connection with a telephone conference call (the "Conference Call") with
analysts and others on the date hereof with respect to the Acquisition, and such
materials are incorporated herein by reference. Certain of the materials include
certain forward-looking statements regarding each of the Corporation, WFBS,
and the combined company following the Acquisition. Such forward-looking
statements involve certain risks and uncertainties, including a variety of
factors that may cause the Corporation's actual results to differ materially
from the anticipated results or other expectations expressed in such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to: (1) expected cost savings from the Acquisition may not
be fully realized or realized within the expected time frame; (2) revenues
following the Acquisition may be lower than expected; (3) competitive pressure
among financial institutions may increase and adversely affect the businesses
engaged in by the combined company; (4) costs, difficulties or delays related to
the integration of the businesses or systems of the Corporation and WFBS may
be greater or longer than expected; (5) interest rate, stock market and monetary
fluctuations may adversely affect the businesses engaged in by the combined
company; (6) general economic conditions, either nationally or in the states or
regions in which the combined company will be doing business, may be less
favorable than expected; or (7) legislation or regulatory changes may adversely
affect the businesses in which the combined company would be engaged. Additional
information with respect to factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements is
included in the Corporation's 1997 Second Quarter Report on Form 10-Q and may be
included in subsequent reports filed by the Corporation with the Securities and
Exchange Commission.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
(99)(a) The News Release.
(99)(b) The materials used in connection with the Conference Call.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION CORPORATION
Date: August 20, 1997 By: /s/ Kent S. Hathaway
Name: Kent S. Hathaway
Title: Senior Vice President
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(99)(a) The News Release.
(99)(b) The materials used in connection with the
Conference Call.
<PAGE>
N E W S
(First Union logo) Wednesday
August 20, 1997
FIRST UNION TO ACQUIRE WHEAT FIRST BUTCHER SINGER, INC.
CAPITAL MARKETS AND RETAIL BROKERAGE CAPABILITIES ENHANCED
CHARLOTTE - First Union has signed a definitive agreement to acquire Wheat First
Butcher Singer, Inc., a full service investment banking, brokerage and asset
management company based in Richmond, Va. The acquisition will accelerate First
Union's ability to provide equity underwriting to its growing corporate client
base, while also expanding its services to individual investors.
Founded in 1934, Wheat First is employee-owned and operates 126 offices in 19
states and the District of Columbia. The firm has nearly 3,000 employees
corporate-wide.
Upon closing, Wheat First will operate under the name Wheat First Union, a
division of First Union Capital Markets Corp., First Union's Section 20
subsidiary. Its asset management subsidiary will continue to operate under the
name of Mentor Investment Group.
Under the terms of the agreement, First Union will exchange 10,267,029 shares of
First Union common stock, which values the acquisition at $471 million, based on
First Union's closing stock price of $45.875 on Aug. 15, 1997. In addition, FTU
has established an employee retention pool of $75 million in restricted stock to
be paid over a 3 year period to certain key employees of Wheat First. First
Union expects the transaction to be accretive to earnings upon consummation.
The acquisition will be accounted for as a pooling of interests and is expected
to close during the fourth quarter of 1997, pending Wheat First stockholder
approval, regulatory approval, as well as other customary conditions of closing.
"Wheat First is the perfect partner for First Union - enabling us to strengthen
our capital markets, asset management and brokerage services immediately," said
Edward E. Crutchfield, chairman and chief executive officer of First Union
Corporation.
-- MORE --
<PAGE>
FIRST UNION TO ACQUIRE WHEAT FIRST - PAGE 2
"The new organization combines First Union's powerful East Coast franchise,
national corporate middle market client base and capital markets capabilities
with Wheat First's well-established equity underwriting and distribution, merger
and acquisition advisory and municipal finance capabilities."
First Union says high client demand is driving its immediate need to offer
equity underwriting. The acquisition of Wheat First gives First Union a solid
platform on which to build additional equity underwriting momentum.
After receiving equity underwriting authority from the Federal Reserve in May,
First Union said that it planned to build its equity underwriting business, but
would consider acquiring an investment bank that met its financial, strategic
and cultural requirements.
"Wheat First is a great strategic fit for First Union on every level," said
Crutchfield. "The firm is highly-regarded in the financial services industry and
has a strong reputation for integrity among clients and competitors. With the
rapid consolidation of the financial services industry, offering equity
underwriting to our clients now enables us to gain a critical competitive edge
in this dynamic marketplace."
The acquisition also creates the largest retail brokerage in the Southeast,
giving First Union additional channels for offering its extensive line of retail
financial products and services.
First Union Brokerage Services, Inc. currently has more than 3,100 Series 6 & 7
- -licensed employees; the new organization will have nearly 4,200. Upon closing,
First Union will operate a brokerage office network of over 2,000 locations
offices in 19 states.
Wheat First, through its asset management subsidiary, Mentor Investment Group,
currently manages approximately $9 billion in the Mentor Mutual Funds. The
Evergreen Keystone Funds, First Union's proprietary mutual fund family, has
approximately $31 billion in assets.
"Based on its business strategy, size, culture and reputation, First Union was
- -- hands-down -- the right choice given the rapidly consolidating financial
industry." said Marshall Wishnack, chairman and chief executive officer of Wheat
First.
-- MORE --
<PAGE>
FIRST UNION TO ACQUIRE WHEAT FIRST - PAGE 3
Wishnack will report jointly to Ken Thompson, executive vice president and
co-managing director of First Union's Capital Markets Group and Don McMullen,
executive vice president and head of First Union's Capital Management Group.
Wheat First has been lead-manager or co-manager of 123 equity offerings since
1992. Wheat First is currently ranked 18th nationally in the equity underwriting
league tables on managed offerings through June 30, 1997. The company has a
specialized industry focus similar to First Union's, which includes the
communications, financial institutions, healthcare, real estate sectors and
others.
First Union's primary engines for generating fee income over the past several
years have been its Capital Markets and Capital Management Groups. The
acquisition of Wheat First builds a bridge between these two strategic lines of
business and fuels the momentum for the future.
In the second quarter of 1997, First Union Capital Markets reported a 148
percent increase in fee income from 1996 and the Capital Management Group
reported 51 percent growth year over year.
First Union Corporation is a full financial services provider and the nation's
6th largest banking company based on assets of approximately $143 billion at
June 30, 1997.
Media Contact at First Union is Marianna Sheridan at 704-383-3715 (office) or
704-333-6447 (home). Media Contact at Wheat First is Marc Rose at 804-782-3679
(office) or 804-353-6973 (home). Investor Contact at First Union is Alice Lehman
at 704-374-4139.
-- END --
Exhibit 99(b)
First Union
and
Wheat First Butcher Singer
Analyst Conference Call
August 20, 1997
<PAGE>
First Union & Wheat First:
Continuing to Build Engines for Growth
- --------------------------------------------------------------------------------
Accelerates Capital Markets equity capabilities
o Customer demand stronger than expected
o Increases competitive product offerings for Capital Markets clients
o Develops stronger relationships with CEOs and key decision makers
o Immediately enhances cross-sell opportunities
o Provides more proprietary equity product for brokerage channel
Strengthens Capital Management Group
o Creates 8th largest retail brokerage network in the nation
o Increases mutual fund assets under management by 37%
Benefits First Union shareholders
o Immediately accretive to earnings
o Bolsters fee income
o Further enhances revenue growth opportunities
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 1 Growth Platform
<PAGE>
Terms of Transaction
- --------------------------------------------------------------------------------
Purchase Price* $471 million, consisting of 10,267,029 First Union shares
Retention Pool $75 million in restricted stock, paid over 3 years
Accounting Method Tax-free pooling of interests
Expected Closing 4Q97
Approvals Required Customary regulatory approvals
* Based on FTU closing price of $45.875 on August 15, 1997.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 2 Transaction Terms
<PAGE>
Financial Benefits for Shareholders
- --------------------------------------------------------------------------------
o Immediately accretive to earnings
o Further diversifies revenue
o Enhances revenue and net income growth
o Minimal EPS risk
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 3 Financial Benefits
<PAGE>
Transaction Overview
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Multiple of Deal Value: Market Capitalization of Recent Deal Values of
Last 12 Months: Wheat First 11 Broker Peers* 5 Investment Banks**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(excluding retention payments)
Revenue 0.90x 1.07x 1.23x
Net Income 13.4x 15.9x 12.2x
Book Value 3.00x 2.14x 4.44x
(including retention payments***)
Revenue 1.01x 1.07x 1.34x
Net Income 15.0x 15.9x 13.2x
Book Value 3.35x 2.14x 4.73x
</TABLE>
* A.G. Edwards, Advest, First Albany, Interra, Interstate/Johnson Lane, Legg
Mason, McDonald & Co., Morgan Keegen, Piper Jaffrey, Raymond James, Scott &
Stringfellow. Average excluding highest and lowest observation. Source:
Bloomberg
** Alex Brown, Dillon Read, Robertson Stephens, Montgomery Securities,
Oppenheimer & Co. Average. Source: Company presentations, analyst reports,
news reports.
*** Value paid at closing plus present value of payments for retention (net of
tax benefits). Deferred compensation (if applicable) also present-valued
for comparable transactions.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 4 Growth Platform
<PAGE>
1 Powerful Synergies Resulting from
Combination of First Union & Wheat First
Complementary
First Union
o Many strong customer relationships with near-term equity needs
o Significant client base in health care, communications, financial
institutions, real estate
o Bank brokerage channel
o Full array of retail financial products
o Continuing momentum in asset management business
Wheat First
o Full-line equity capabilities
o Equity research focus on selected industries including health care,
communications, financial institutions, real estate
o Non-bank brokerage channel
o Need for full range of financial products
o Adds $11.5 billion in assets under management
Compatibility
Focus on specialized industries and middle-market
Similar geographic footprint
Consistent corporate cultures
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 5 Powerful Synergies
<PAGE>
Strategic Fit: Capital Markets
First Union Wheat First
Equity Underwriting x
Equity Research x
Equity Sales & Trading x
M&A Advisory x x
High Yield x x
Loan Syndications x
Asset-Backed Securities x
Derivatives x
Private Equity x
Mezzanine Capital x
Real Estate Finance x x
Municipal Finance x x
Specialized Industry Focus x x
Private Placements x x
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 6 Strategic Fit
<PAGE>
Wheat First Equity Platform
Research
o 30 analysts
o Covers 300 companies
o Focused on specialized industries
Investment Banking
o 33 bankers
o Integrated Corporate Finance, M&A, equity
o 123 equity transactions
o 14 convertible debt and preferred stock deals
o 70 M&A transactions
Sales and Trading
o 63 Sales/Traders
o Covers 1,250 institutional clients
o Maintains a market in 300 NASDAQ stocks
Note: Transactions are those completed since 1992.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 7 Equity Platform
<PAGE>
Growing Profitability
(Graph appears here with the following text.)
Strategic Importance Profitability
CEO
CFO
Treasurer
Cash Management
Risk Management
Private Debt
Bank Loans
High Yield
Syndicated Loans
Equity
o Private Equity
o Mezzanine Capital
o IPO's
o Secondary Offerings
M&A
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 8 Strategic Growth
<PAGE>
Strategic Fit: Capital Management Group
FTU Wheat First Combined
Mutual Fund Assets $31 $9* $40
(in billions)
Licensed Reps 3,135 1,053 4,188
(Series 6 & 7)
Brokerage Offices** 1,900 117 2,017
States Served 12 19 19
* Total assets under management equal $11.5 billion.
** Includes all First Union branches which are licensed with the SEC to sell
brokerage services.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 9 Strategic Fit
<PAGE>
Wheat First Historical Financial Performance
Revenue and Net Income
(Dollars in Millions)
(Graph appears here with the following plot points.)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
14% CAGR in Revenue Over
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7 Year Period 198 194 259 311 349 319 414 494 521*
26% CAGR in Net Income
Over 7 Year Period 6.0 3.7 13.7 20.0 21.1 20.8 28.4 32.0 35.0*
</TABLE>
* Trailing 12 months ended July 31, 1997.
Fiscal Year Ends March 31.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 10 Historical Performance
<PAGE>
Wheat First Business Unit Performance
Composition of Revenue*
(Pie chart appears here with the following plot points.)
Capital Markets
Equity 12%
Fixed Income 8%
Clearing 6%
Asset Management
Asset Management 5%
Retail Brokerage
Retail 69%
*Based on internal management reporting data for FYE March 31, 1997.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 11 Wheat First Overview
<PAGE>
Wheat First Overview:
Capital Markets Group
o Includes Equity and Fixed Income Groups
o Focused on middle-market and selected industries
o Integrated corporate finance, M&A, debt, equity research, sales and
trading capabilities
o National coverage through 9 institutional sales offices
o Lead- or Co-managed 123 equity deals since 1992, ranked 16th in 1997
IPOs
(Pie chart appears here with the following plot points.)
Net Income* $7.4 million
Total Revenue* $99 million
*Based on internal management reports
for the 12 months ended July 31, 1997.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 12 Wheat First Overview
<PAGE>
Wheat First Overview:
Retail Brokerage Group
o Provides comprehensive brokerage services including stocks, bonds,
mutual funds and a variety of other investments
o Over 1,000 financial consultants in 117 full service brokerage offices
o 540,000 customer accounts representing over $35 billion in client assets
o WFS Clearing Services provides execution, clearing and settlement
services to 54 brokerage firms
(Pie chart appears here with the following plot points.)
Net Income* $21.5 million
Total Revenue* $393 million
*Based on internal management reports
for the 12 months ended July 31, 1997.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 13 Wheat First Overview
<PAGE>
Wheat First Overview:
Asset Management - Mentor Investment Group
o Offers 25 Mentor mutual funds
o Employs numerous investment styles for managing retail and institutional
funds
o Experienced rapid growth in managed assets from $600 million in 1992 to
over $11.5 billion currently
o 750,000 shareholders
(Pie chart appears here with the following plot points.)
Net Income* $6.1 million
Total Revenue* $29 million
*Based on internal management reports
for the 12 months ended July 31, 1997.
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 14 Wheat First Overview
<PAGE>
Summary: First Union/Wheat First
First Union
o Leverages our primary engines for growth
o Immediately accretive to earnings
o Accelerates fee revenue growth
o Similar client base and corporate cultures
Capital Markets
o One-stop shopping capabilities
o Leverages existing relationships
o Enhances competitive position
o Creates better cross-sell opportunities
Capital Management Group
o Creates 8th largest brokerage in nation
o Provides new channel for financial products
o Increases assets under management
- --------------------------------------------------------------------------------
(First Union logo appears here) Wheat First exhibit 15 Summary
