First Union Stands By Its Bid for Wachovia

First Union Corp. defended its $12.6-billion takeover offer for Wachovia Corp. as superior to a surprise $13.5-billion bid from rival suitor SunTrust Banks Inc., but it did not try to trump the higher offer.

The Charlotte, N.C.-based company said its offer is not much lower than that of Atlanta-based SunTrust and would result in greater earnings, capital and savings. Moreover, “hostile bids in the banking industry have a terrible track record and are clearly disruptive to shareholders, employees and customers,” said Chief Executive Ken Thompson.

The two Southeastern banks have squared off with dueling bids to buy Wachovia to expand their reach into the populous and relatively affluent state of North Carolina. SunTrust on Monday offered 1.081 of its shares for each share of Winston-Salem-based Wachovia, or about $13.5 billion. First Union, which has called SunTrust’s counteroffer “hostile,” said it is now taking its merger proposal to institutional shareholders.

First Union’s stock fell 4 cents to close at $30.62, SunTrust closed up 8 cents at $60.08, and Wachovia closed off 2 cents at $64.73, all on the New York Stock Exchange.