Economy

BB&T will buy SunTrust in deal worth $66 billion

BB&T will buy SunTrust in deal worth $66 billion”

When the two Southern banks are combined, the new company will serve more than 10 million US households, with approximately $442 billion in assets, $301 billion in loans, and $324 billion in deposits, according to a joint news release detailing the plan.

SunTrust shareholders will gain just under 1.3 shares of BB&T for each share SunTrust share they own.

A new name is yet to be determined.

The Trump administration is taking a much softer stance on bank regulations, and has appointed dozens of new business-friendly policymakers into critical positions at the nation's bank regulators.

"We have been expecting a step up in the pace of banking industry consolidation with the belief that the increasing importance of scale and branding coupled with regulatory support (i.e., the $700bn tailoring line) would drive bigger bank deals", Credit Suisse's Susan Katzke said in a note to clients.

Analysts largely expect regulators to approve the deal, although it will likely draw scrutiny from vocal bank critics like US senators Elizabeth Warren and Bernie Sanders.

"This is a true merger of equals, combining the best of both companies to create the premier financial institution of the future", BB&T's chairman and CEO, Kelly King, said.

SunTrust, the region's sixth-largest bank by deposits, has grown its Charlotte-area presence since entering North Carolina through acquiring Tennessee's National Commerce Financial in 2005. The combined company plans to operate under a new name and will be headquartered in Charlotte, North Carolina, but maintain large operations in Atlanta and Winston-Salem, North Carolina - the locations of the two companies' current headquarters.

Both of the banks are calling it a "merger of equals".

GAAP and Cash EPS accretion per BB&T share in 2021 is expected to be approximately 13% and 17%, respectively (based on Street estimates). He estimated divestitures at approximately $1 billion. The per share deal value of $62.85 is at a 7 percent premium to SunTrust's closing price on Wednesday, according to a Reuters calculation. Until then, Rogers will serve as president and chief operating officer. BB&T shareholders will own about 57 percent and SunTrust shareholders will own about 43 percent of the business. On March 12, 2022, Rogers will also become Chairman and Chief Executive Officer of the combined company and its bank subsidiary.

Daryl Bible, chief financial officer of BB&T, said during the call that the amount of divestitures that'll be needed for the transaction to be completed will be minimal. After that, he'll serve a further six months as executive chairman. He will then take over as CEO and King will continue to serve as chairman until 2023.

BB&T stock was up about 5% in early trading, while SunTrust bounced more than 10%.



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