CHARLOTTE, N.C. - First Union Corp. and Wachovia Corp. won another round Monday in their merger battle with SunTrust Banks Inc. when a large shareholder advisory firm gave its blessing to the First Union-Wachovia deal.
Institutional Shareholder Services Inc. of Rockville, Md., which advises about 700 institutional investors on proxy votes, recommended a vote in favor of the Easter Sunday merger agreement. "SunTrust has failed to make a sufficient case for rejecting the proposed deal," the firm said in a report.
The opinion was the second of its kind in three days and the latest in a series of tactical victories for the North Carolina banks as they try to hold off a challenge to their deal from SunTrust Banks Inc. of Atlanta. Wachovia shareholders are to vote on the merger Aug. 3.
Proxy Monitor Inc., a New York research firm that advises about 200 institutional shareholders on proxy votes, had endorsed the First Union-Wachovia deal on Friday, saying it could produce long-term value for shareholders. The firm said it was worried that even if SunTrust were to win the proxy battle, it might be unable to pull off its own deal with Wachovia.
In a joint statement, Wachovia and First Union said: "We welcome these independent third-party recommendations. The recommendations reflect an understanding of the complex strategic and economic benefits of our merger." SunTrust spokesman Barry Koling said: "We disagree with the ISS' conclusion. We don't think it will have much significance."