UNITED STATES
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): September 6, 1996
Keystone Investments, Inc./Keystone Investment Management Company
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(Exact Name of Registrants as Specified in Charter)
Delaware 033-64506 04-3071173 / 04-1504645
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(State or Other Jurisdiction (Commission (I.R.S. Employer
Of Incorporation) File Number) Identification Nos.)
200 Berkeley Street, Boston, Massachusetts 02116-5034
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(Address of Principal Executive Offices) (Zip Code)
Registrants' Telephone Number, Including Area Code (617) 338-3200
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Item 5 - Other Events
On September 6, 1996, Keystone Investments, Inc. ("Keystone") entered into an
Agreement and Plan of Acquisition and Merger with First Union Corporation
("First Union") and First Union National Bank of North Carolina ("FUNB - NC")
(the "Agreement"), which provides for, among other things, the merger of
Keystone with and into a wholly-owned subsidiary of FUNB - NC (the
"Acquisition"). The surviving corporation will be known as Keystone Investments,
Inc.
Keystone is a private corporation predominantly owned by current and former
members of management. On or after the effective date of the Acquisition, which
is currently expected to be on or around December 23, 1996 (the "Effective
Date"), and subject to the terms and conditions contained in the Agreement, all
of the shares of Keystone's common stock outstanding immediately prior to the
Effective Date will be exchanged for shares of common stock of First Union.
Consummation of the Acquisition is subject to receipt of regulatory and
shareholder approvals, as well as other conditions set forth in the Agreement.
No assurance can be given that the Acquisition will be consummated.
A copy of the News Release announcing the signing of the Agreement is attached
hereto as Exhibit 99 and is incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit No. Description
99 News Release of First Union dated September 6, 1996.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
each of the registrants has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: September 10, 1996 KEYSTONE INVESTMENTS, INC.
/s/ Rosemary D. Van Antwerp
Rosemary D. Van Antwerp
Senior Vice President
KEYSTONE INVESTMENT
MANAGEMENT COMPANY
/s/ Rosemary D. Van Antwerp
Rosemary D. Van Antwerp
Senior Vice President
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FIRST UNION N E W S
September 6, 1996 Media Contact: Marianna Sheridan
First Union
(704) 383-3715
Investor Contact: Alice Lehman Jack McAllister
First Union Keystone Investments
(704) 374-4139 (617) 338-3319
FIRST UNION TO BECOME 3RD-LARGEST BANK MUTUAL FUND
ADVISOR WITH ACQUISITION OF KEYSTONE INVESTMENTS
CHARLOTTE, N.C. - First Union Corporation (NYSE:FTU) has announced an agreement
to acquire Keystone Investments, Inc., a Boston-based investment management and
mutual fund company with $11.6 billion in assets under management.
This acquisition, combined with the Evergreen family of mutual funds managed by
First Union, will create a highly competitive mutual fund complex consisting of
69 individual mutual funds and nearly $27 billion in assets under management.
First Union will become the third-largest bank-advised mutual fund organization,
the second-largest bank manager of equity mutual fund assets, and the 27th
largest mutual fund manager in America, based on mutual fund assets under
management.
The acquisition will provide extensive national and global distribution
capabilities, a broadened mutual fund product line and state-of-the-art
technology, according to First Union.
"First Union is committed to building the premier money management organization
in America and the acquisition of Keystone will accelerate our strategy for
growing mutual fund assets under management and building non-interest income for
the corporation," said Donald McMullen, First Union executive vice president and
head of the Capital Management Group.
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First Union Corporation Contact:
Corporate Communications Division R. Jeep Bryant
Two First Union Center 0570 Senior Vice President, Media Relations
Charlotte, North Carolina 28288-0570 Work: 704 374-2957
NYSE: FTU and FTUpr Home: 704 442-9046
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FIRST UNION TO BECOME 3RD-LARGEST BANK MUTUAL FUND
ADVISOR WITH ACQUISITION OF KEYSTONE INVESTMENTS -- 2
"This acquisition offers First Union new market opportunities, solid operating
structure and a stronger family of mutual funds that will complement the
existing Evergreen product line."
The transaction will be accounted for as a pooling of interests. First Union
will issue 2,912,000 shares of common stock for the acquisition. The shares
issued by First Union are valued at approximately $183 million based on the
closing stock price of $62.875 on September 5, 1996. First Union will also
assume approximately $106 million of net debt from Keystone. Net debt is total
long-term debt less cash and cash equivalents on the balance sheet
The acquisition is expected to be accretive to earnings per share in 1998 and is
scheduled to close in late 1996 or early 1997, subject to approval by
shareholders of the Keystone family of mutual funds, regulatory approval, and
other conditions of closing.
Keystone Investments, one of the nation's oldest investment management firms,
manages 33 retail, three institutional and nine foreign mutual fund portfolios.
The company uses a well-established distribution system of more than 3,500
broker/dealers and 27,000 brokers. Equity and fixed income funds account for
more than 96.5 percent of the mutual fund assets under management. Keystone has
also established a significant global distribution network. It currently ranks
as the top foreign mutual fund manager in Japan, based on mutual fund assets
under management.
The First Union-advised Evergreen mutual fund family, founded in 1971, now
consists of 36 mutual funds. Through internal growth and acquisitions, Evergreen
has more than doubled its assets from $7 billion to $16.2 billion since the
beginning of 1995. Evergreen was recently ranked among the top 10 mutual fund
families in America by Barron's.
Combined, the transaction will provide a powerful distribution network of 4,200
broker/dealers nationwide; nearly 30,000 brokers; 32 external wholesalers and 46
internal salespeople -- as well as global distribution in five countries.
First Union cites Keystone's state-of-the-art transfer agency services among the
appealing assets its new partner will bring to the organization. The transfer
agency will allow the combined mutual fund family to provide efficient, superior
service to shareholders and brokers.
"This is an extremely attractive fit for both institutions. Keystone will gain
access to First Union's substantial retail network, while the Evergreen funds
will benefit from our well-established broker/dealer relationships throughout
the country and the world," said Albert H. Elfner, III, Chairman and Chief
Executive Officer of Keystone Investments, Inc. "We are delighted at the
prospect of being part of one of the strongest and most dynamic financial
service organizations in America."
"Keystone's management style complements First Union's existing strategy and
broadens our product line in key areas such as corporate bond funds, small cap
global opportunity funds, strategic income funds, international funds and
aggressive growth funds," said William M. Ennis, President of Evergreen
Investment Services. "Keystone also offers significant economies of scale and
critical mass to our Evergreen mutual fund family."
"As a model of operational and technical excellence within the mutual fund
industry, Keystone's strong foundation for centralized customer service in
Boston is among the attractive features we offer First Union," said Elfner. "By
combining with First Union, we have an opportunity to leverage our excellent
service over a larger customer base."
"Equally significant, we see an opportunity to continue our emphasis on building
a strong investment management capability and to increase our distribution
potential substantially."
Following the acquisition, Elfner will remain president, chairman and chief
executive officer of Keystone Investments, reporting to McMullen. Ennis will
become president of distribution for Keystone and Evergreen Investment Services
and assume dual responsibility for distribution, service, sales, marketing and
fund administration for both organizations.
First Union Corporation, based in Charlotte, is the nation's sixth-largest bank
holding company with assets of approximately $140 billion. First Union is a full
financial services provider serving more than 12 million corporate and retail
customers throughout the East Coast and the nation.
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