$66 Billion Merger Between BB&T (BBT) and SunTrust (STI) is Largest US Bank Deal in Over a Decade

BB&T Suntrust Merger

BB&T Suntrust MergerThe North Carolina-based holding company BB&T Corporation has announced it will be merging with SunTrust Banks, Inc. The all-stock merger will form the sixth largest bank in America but its name has yet to be revealed. The deal is valued at a hefty $66 billion and will join the two companies into one bank. The two banks are calling the move a “merger of equals” but BB&T shareholders hold 57 percent of the new bank to SunTrust shareholders’ 43 percent. The headquarters of the as of yet unnamed bank are set to be located in Charlotte, North Carolina. The two companies issued a joint press release saying they expect to finalize the merger by the fourth quarter of 2019.

The chairman and CEO of BB&T, Kelly S. King, will retain his position and assume the same duties at the new bank until his contract expires on September 12, 2021. After King’s time as CEO comes to an end, SunTrust Chairman and CEO William H. Rogers will be taking over as head of the newly formed bank. Rogers will assist King as president and chief operating officer in the interim. Moving forward, the two companies will contribute an equal number of members to the new board of directors to keep an even split of power. King issued a press release on behalf of the two interests stating, “This is a true merger of equals, combining the best of both companies.” He added that will remain in his role as CEO to help them “compete and win in the rapidly evolving world of financial services.

The combined assets of both BB&T and SunTrust equal around $442 billion with an additional $301 billion in loans and $324 billion worth of deposits. The next largest bank is U.S. Bancorp which has around $467 billion in assets. The unnamed bank will set its sights on expanding its area of business across the East Coast from its central headquarters in North Carolina. Both BB&T and SunTrust will continue to operate in their respective home regions so customers of either bank won’t have to worry about being negatively impacted. The move is another sign that the lingering effects of the financial crisis of 2008 are finally fading away. The U.S. President has made it a point to ease regulations that were previously initiated during the crisis and restricted the expansion of banks. The deal also brings good news for SunTrust shareholders who will receive a 7 percent premium to SunTrust’s closing price on Wednesday. For each share of SunTrust, shareholders will receive 1.295 shares of BB&T at the agreed 7 percent premium equaling approximately $62.85 per share. SunTrust shares rose above the acquisition price by around 10% Thursday morning with BB&T shares rising 5 percent.

After the merger, the two companies will have a combined total of 275 years of operation. The new bank projects both companies’ shareholders will see double-digit earnings per share by 2021. Chairman and Chief Executive Officer of SunTrust William H. Rogers said in a press release, “By bringing together these two mission- and purpose-driven institutions, we will accelerate our capacity to invest in transformational technologies for our clients. Our shared culture embraces the disruption of technology and we will take this innovative mindset to expand our leadership in the next chapter of these historic brands.” Rogers also spoke highly of the BB&T Chairman and CEO saying, “I have tremendous respect for Kelly, his leadership team and the BB&T associates. We will leverage our respective strengths as we focus together on the future.”

Source: Investorroom


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