First Union Bid Gains Advisor Nod

July 24, 2001 ( - SunTrust's bid for Wachovia was further frustrated after a proxy adviser recommended that its institutional investor clients support First Union's $14.4 billion plan to acquire the Southeastern US Bank.

According to the proxy advisor, Institutional Shareholder Services (ISS), which makes recommendations on contentious issues scheduled for vote by shareholders, SunTrust failed to:

  • prove its deal was sufficiently attractive for shareholders to reject the First Union merger,
  • show a Wachovia-SunTrust merger was demonstrably more attractive, and
  • show the First Union deal was irreparably tainted by process irregularities.

ISS?s recommendations are considered influential since large institutional shareholders pay the group for its advice and then vote in line with its recommendations.

Institutional Impetus

Another advisor, Proxy Monitor Inc., recommended Friday that Wachovia investors approve First Union’s bid.

Nonetheless, SunTrust says it doesn’t expect the counsel to have much impact. In a press release, SunTrust noted “Given Wachovia’s large retail shareholder base and the fact that most larger institutions make their own decisions, SunTrust believes that ISS’s position will sway few votes.”

Nearly half of Wachovia’s shareholder base is comprised of retail investors.

Wachovia stockholders will meet on August 3 to vote on the First Union deal.