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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): December 28, 2005
Westcorp
(Exact Name of Registrant as Specified in its Charter)
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California
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001-09910
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51-0308535 |
(State or Other Jurisdiction of
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(Commission File Number)
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(I.R.S. Employer |
Incorporation or Organization)
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Identification No.) |
23 Pasteur, Irvine, California 92618-3804
(Address of Principal Executive Offices) (Zip Code)
(949) 727-1002
(Registrants telephone number,
including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
TABLE OF CONTENTS
Item 8.01 Other Matters.
On December 28, 2005, WFS Financial Inc., which we refer to as WFS, reached an agreement in
principle with the lead plaintiff, Alaska Hotel and Restaurant Employees Pension Trust Fund, which
we refer to as the Plaintiff, to settle the action titled In re WFS Financial Shareholder
Litigation, Case No. 04CC00559, which we refer to as the Action, pending in the Superior Court
for Orange County, California, pursuant to which WFS agreed to resolve disputed legal claims and to
make certain additional disclosures regarding the merger of Westcorp with and into Wachovia
corporation, which we refer to as the Westcorp merger, and the merger of WFS and a new
subsidiary, which we refer to as the WFS merger, as set forth in this current report on Form 8-K.
As part of the agreement in principle, WFS also agreed to pay the Plaintiffs legal fees and costs
in the amount of $550,000. The Action, brought in May 2004, and subsequently amended in August
2004 and September 2004, was originally brought by the Plaintiff in connection with a proposed
merger of Western Financial Bank and WFS, pursuant to which Westcorp would acquire the
publicly-owned minority shares of WFS, which we refer to as the 2004 merger. This agreement in
principle is expected to be memorialized in one or more memoranda of understanding and stipulations
of settlement, will be subject to customary terms and conditions, including court approval, and
will include an agreement by the Plaintiff, on behalf of a class of WFS shareholders, to provide a
release of claims of WFS shareholders against Westcorp and WFS and their respective officers and
directors. This Form 8-K should be read in conjunction with the definitive proxy
statement-prospectus dated November 22, 2005, which we refer to as the Proxy Statement.
As disclosed in the Background of the Mergers section of the Proxy Statement, in December
2004, the Westcorp board of directors authorized management to explore potential contingent
restructuring alternatives to the 2004 merger, in the event that the conversion of Western
Financial Bank to a California state commercial bank and the 2004 merger could not go forward as
planned. The contingent restructuring alternatives preliminarily explored by management included
the possibility of divesting Western Financial Bank and making WFS a California finance company,
obtaining consumer lending licenses for WFS in the states in which it
does business, converting Western
Financial Bank into an industrial bank and selling Westcorp.
In December 2004, the WFS board of directors, including members of the WFS Special Committee,
were apprised of the various contingent restructuring alternatives that were being considered by
Westcorp and in March 2005 were apprised of the actions by the Westcorp board of directors with
respect to those alternatives.
Beginning on April 4, 2005, Westcorps financial advisor, Credit Suisse First Boston LLC,
which we refer to as Credit Suisse First Boston, at the direction of Westcorp, contacted 15
parties to assess, on a preliminary basis, their interest in entering into discussions regarding a
potential strategic business combination with Westcorp. Of these 15 parties, eight potential
bidders entered into confidentiality and standstill agreements and were provided with a
confidential information memorandum regarding Westcorp and its subsidiaries, including WFS. Only
those bidders that entered into confidentiality and standstill agreements were invited to submit a
preliminary, non-binding indication of interest regarding an acquisition of all of the outstanding
shares of Westcorp common stock and to detail such bidders intent with respect to the interest in
WFS not held by Westcorp.
As disclosed in the Background of the Mergers section of the Proxy Statement, in August 2004,
the WFS Special Committee retained Deutsche Bank Securities Inc., which we refer to as Deutsche
Bank, as its financial advisor in connection with any potential acquisition of
Westcorp by a third party. Deutsche Bank was provided with various financial and other
information regarding Westcorp and WFS, including the financial projections prepared by management
in April 2005 which were provided to potential bidders. These projections were not subsequently
updated by management.
As disclosed in the Background of the Mergers section of the Proxy Statement, the Westcorp
Special Committee met with representatives of its legal and financial advisors on September 5,
2005, and discussed the contingencies of the outstanding bid from Wachovia and the outstanding bid
from an all cash bidder that proposed a going private structure, which we refer to as the going
private bidder. As of September 5, 2005, Wachovia was offering an exchange ratio of 1.290 shares
of Wachovia common stock for each outstanding share of Westcorp (that, based on Wachovias closing
stock price on August 31, 2005, had an indicated value of $64 per share) and an exchange ratio of
1.398 shares of Wachovia common stock for each outstanding share of WFS common stock not held by
Western Financial Bank (that, based on Wachovias closing stock price on August 31, 2005, had an
indicated value of $69.36 per share). In addition, as of September 5, 2005, the going private
bidder was offering $64 in cash per outstanding share of Westcorp common stock (other than shares
of Westcorp owned by Ernest S. Rady, Westcorps and Western Financial Banks chairman of the board
and chief executive officer and WFS chairman of the board, or entities controlled or owned by Mr.
Rady) and $71.04 in cash per outstanding share of WFS common stock (other than shares of WFS common
stock held by Western Financial Bank) based on an exchange ratio of 1.11 shares of Westcorp common
stock for each outstanding share of WFS common stock not held by Western Financial Bank.
At the September 5, 2005 meeting, the Westcorp Special Committee discussed the risks that
remained in the bids of each of Wachovia and the going private bidder and the relative risks,
including the execution risks (that is, the ability to successfully negotiate and execute a
definitive merger agreement and close the transactions contemplated by such agreement), between the
two proposals. In addition, for due diligence purposes, the Westcorp Special Committee inquired of
Mr. Rady whether or not he was close to coming to agreement with the going private bidder, or if
there continued to be significant unresolved issues, because that would affect the Westcorp Special
Committees view of the relative execution risks between the two proposals. Mr. Rady informed the
Westcorp Special Committee that there were still significant tax, structural and assorted business
issues regarding his agreement with the going private bidder and it was not clear as to when such
issues would be resolved.
On September 7, 2005, the Westcorp Special Committee and its legal and financial advisors met
with the WFS Special Committee and representatives of its legal and financial advisors, and the
Westcorp Special Committee presented the Wachovia proposal to the WFS Special Committee. At the
request of the Westcorp Special Committee, representatives of Credit Suisse First Boston reviewed
the marketing process that had occurred since April 2005 and outlined the key terms of the Wachovia
proposal for the WFS Special Committee. The Westcorp Special Committee informed the WFS Special
Committee that it had not attempted to directly negotiate on WFS behalf on the basis that the WFS
Special Committee would have the opportunity to have its own direct negotiations with Wachovia.
However, the Westcorp Special Committee noted that the WFS minority shareholders had indirectly
benefited from each increase in the bids for Westcorp given that the bids for WFS were related to
the Westcorp bids.
As disclosed in the Background of the Mergers section of the Proxy Statement, the Westcorp
Special Committee negotiated on behalf of Westcorp the various bids for Westcorp that were
submitted. The WFS Special Committee began negotiations regarding a potential
acquisition of WFS on September 7, 2005, after the Westcorp Special Committee had decided to pursue
a transaction with Wachovia.
As described on page 43 in the Background of the Mergers section of the Proxy Statement, the
WFS Special Committee instructed Deutsche Bank to request an exchange ratio that would result in an
indicated value of $77.50 per WFS share (based on the closing price of Wachovia common stock on
September 7, 2005). The WFS Special Committee requested an indicated value of $77.50 because that
value (which reflected an implied relative exchange ratio between WFS and Westcorp of 1.21) was an
improvement over Wachovias September 7, 2005 offer to WFS with an indicated value of $73.60.
As disclosed in the risk factor titled Because the Market Price of Wachovia Common Stock May
Fluctuate, Westcorp and WFS Shareholders Cannot Be Sure of the Market Value of the Wachovia Common
Stock That They Will Receive in the Respective Mergers in the Risk Factors section of the Proxy
Statement, any change in the price of Wachovia common stock prior to the completion of the
respective mergers will affect the market value of Wachovia common stock that Westcorp and WFS
shareholders will receive in the respective mergers. None of the parties is permitted to terminate
the merger agreement or resolicit the vote of shareholders solely because of changes in the market
prices of Wachovia common stock. In addition, the parties were unable to agree on the use of a
collar, and therefore the merger agreement does not place a collar on Wachovias stock price. A
collar is a contractual provision that places both an upper and lower limit on the acquiring
companys stock price. As a result of a collar, the number of shares of acquiring company stock
that the target shareholders receive is increased or decreased, within a range, depending on the
value of the acquiring companys stock price. Collars can reduce the fluctuation in the value of
the consideration that target shareholders receive at the effective time of the merger.
As described on page 63 in the Opinion of Financial Advisor to the WFS Special Committee
section of the Proxy Statement, Deutsche Bank identified 33 transactions announced since January
2002 in which the value of the transactions was between $2 billion and $5 billion and for which
public information was available. The following transactions were identified:
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Target |
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Acquiror |
Oxford Health Plans Inc.
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UnitedHealth Group Inc. |
Chelsea Property Group Inc.
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Simon Property Group Inc |
PanAmSat Corp.
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Investor Group |
United Defense Industries Inc.
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BAE Systems North America |
NetScreen Technologies Inc.
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Juniper Networks |
Trigon Healthcare Inc.
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Anthem Inc. |
International Steel Group Inc.
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Ispat International NV |
Panamerican Beverages Inc.
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Coca-Cola FEMSA SA CV |
UnitedGlobalCom Inc.
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Liberty Media International Inc. |
Hispanic Broadcasting Corp.
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Univision Communications Inc. |
SICOR Inc.
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Teva Pharma Industries Ltd. |
First Virginia Banks Inc.
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BB&T Corp. |
SpectraSite Inc.
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American Tower Corp. |
Neuberger Berman Inc.
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Lehman Brothers Holdings Inc. |
Texas Genco Holdings Inc.
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Investor Group |
Dial Corp.
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Henkel KGaA |
Pennzoil-Quaker State Co.
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Shell Oil Co. |
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Target |
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Acquiror |
Mid Atlantic Medical Services Inc.
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UnitedHealth Group Inc. |
Metro-Goldwyn-Mayer Inc.
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Investor Group |
Titan Corp.
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L-3 Communications Holdings Inc. |
Apogent Technologies Inc.
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Fisher Scientific International Inc. |
Westport Resources Corp.
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Kerr-McGee Corp |
Varco International Inc.
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National-Oilwell Inc. |
Millennium Chemicals Inc.
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Lyondell Chemical Co. |
Tom Brown Inc.
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EnCana Corp. |
Scios Inc.
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Johnson & Johnson Inc. |
LNR Property Corp.
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Riley Property Holdings LLC |
Chateau Communities Inc.
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Hometown America LLC |
Magnum Hunter Resources Inc.
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Cimarex Energy Co. |
Accredo Health Inc.
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Medco Health Solutions Inc. |
Rational Software Corp.
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IBM Corp. |
Provident Financial Group Inc.
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National City Corp. |
Extended Stay America Inc.
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Blackstone Group LP |
With regard to the opinions rendered by Credit Suisse First Boston and Deutsche Bank,
the respective financial advisors to the Westcorp Special Committee and the WFS Special Committee,
in connection with the Westcorp merger and the WFS merger, Westcorp and WFS paid such financial
advisors an aggregate of $1.675 million. Westcorp and WFS will pay these financial advisors
additional fees upon the consummation of the Westcorp merger and the WFS merger. Assuming that the
Westcorp merger and WFS merger were consummated as of December 20, 2005 (based on the number of
options for, and shares of, Westcorp common stock and WFS common stock as set forth in the Merger
Agreement), the companies would have paid aggregate additional fees of approximately $13.292
million to such financial advisors in connection with the consummation of the Westcorp merger and
WFS merger. The actual amount of additional fees to be paid to each of Credit Suisse First Boston
and Deutsche Bank will not be determined until the consummation of the Westcorp merger and the WFS
merger.
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Additional Information
This document contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended.
Forward-looking statements are identified by the use of terms and phrases such as anticipate,
believe, could, estimate, expect, intend, may, plan, predict, project, will,
and similar terms and phrases, including references to assumptions. Forward-looking statements in
this document include statements regarding the proposed mergers.
These statements are subject to uncertainties and factors relating to Westcorps operations and
business environment, all of which are difficult to predict and many of which are beyond its
control that could cause actual results to differ materially from those expressed in or implied by
these forward-looking statements. The following factors are among those that may cause actual
results to differ materially from the forward-looking statements: receipt of the requisite approval
for the Westcorp merger by Westcorps shareholders, the receipt of the requisite approval of the
WFS merger by WFS shareholders (including the approval of a majority of shares of WFS common stock
represented and voting at the WFS shareholder meeting, excluding shares of WFS common stock held by
Westcorp and its affiliates); receipt of requisite regulatory approvals, including the approval of
applicable banking regulators; receipt of opinions as to the tax treatment of the mergers; listing
on the New York Stock Exchange, Inc., subject to notice of issuance, of Wachovias common stock to
be issued in the mergers; actual or potential litigation; the exercise of discretionary authority
by regulatory agencies; and the satisfaction of certain other conditions. Westcorp
can provide no assurances that the Westcorp merger or the WFS merger will close when expected, if
at all. A further list of risks, uncertainties and other matters can be found in Westcorps filings
with the SEC. If one or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, Westcorps actual results may vary materially from those expected,
estimated or projected. The information contained in this document is as of the date of this
document. Westcorp assumes no obligation to update any forward-looking statements to reflect future
events or circumstances.
The proposed merger of Westcorp with Wachovia will be submitted to Westcorps shareholders for
their consideration and the proposed acquisition of WFS by Wachovia, pursuant to the merger of WFS
with a new wholly owned subsidiary of Wachovia, will be submitted to WFS shareholders for their
consideration. Wachovia has filed a registration statement, which includes a definitive joint proxy
statement-prospectus for each of Westcorp and WFS, and each of Wachovia, Westcorp and WFS may file
other relevant documents concerning the proposed mergers with the SEC. The registration statement
containing the definitive joint proxy statement-prospectus was declared effective by the SEC on
November 22, 2005. Shareholders are urged to read the definitive joint proxy statement-prospectus
and any other relevant documents filed with the SEC, as well as any amendments or supplements to
those documents, because those documents will contain important information about Wachovia,
Westcorp, WFS, the proposed mergers and transactions contemplated thereby and related matters. You
can obtain a free copy of the definitive joint proxy statement-prospectus, as well as other filings
containing information about Wachovia, Westcorp and WFS, at the SECs website
(http://www.sec.gov). You will also be able to obtain these documents, free of charge, at
Wachovias website (http://www.wachovia.com) under the tab Inside Wachovia Investor
Relations and then under the heading Financial Reports SEC Filings. Copies of the definitive
joint proxy statement-prospectus, and SEC filings that are incorporated by reference therein, can
also be obtained, free of charge, by directing a request to Wachovia Corporation, Investor
Relations, One Wachovia Center, 301 South College Street, Charlotte, NC 28288-0206, (704)-374-6782;
or to Westcorp or WFS, Attn: Investor Relations, 23 Pasteur, Irvine, CA 92618, (949)-727-1002.
Wachovia, Westcorp and WFS and their respective directors and executive officers, may be deemed to
be participants in the solicitation of proxies from the shareholders of Westcorp and/or WFS in
connection with the proposed mergers. Information about the directors and executive officers of
Wachovia is set forth in the proxy statement for Wachovias 2005 annual meeting of shareholders, as
filed with the SEC on a Schedule 14A on March 14, 2005. Information about the directors and
executive officers of Westcorp is set forth in the proxy statement for Westcorps 2005 annual
meeting of shareholders, as filed with the SEC on a Schedule 14A on March 28, 2005, and information
about the directors and executive officers of WFS is set forth in the proxy statement for WFS 2005
annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 28, 2005.
Additional information regarding the interests of those participants and other persons who may be
deemed participants in the transaction may be obtained by reading the definitive joint proxy
statement-prospectus once it is available, regarding the proposed mergers. You may obtain free
copies of these documents as described in the preceding paragraph.
SIGNATURE
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.
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WESTCORP,
a California corporation
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Date: December 29, 2005 |
By: |
/s/
Robert J. Costantino |
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Robert J. Costantino |
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Executive Vice President,
Chief Financial Officer and
Chief Operating Officer |
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