Saturday, 23 February, 2019

BB&T, SunTrust Deal Could Be First in Wave of Big Bank Mergers

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Nellie Chapman | 07 February, 2019, 21:55

When the two Southern banks are combined, the new company will serve more than 10 million USA 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.

BB&T Corporation and SunTrust Banks said on February 7 that they have agreed an all-stock merger valued at around $66bn.

BB&T Chairman and chief executive officer Kelly King called the deal a "true merger of equals" in prepared remarks.

The banks said Thursday that the combined company will be the sixth-largest US bank based on assets and deposits. The expected benefits of the transaction include a pro forma efficiency ratio of 51%, peer best ROATCE of 22% and projected tangible book value per share accretion at close for BB&T shareholders of approximately 11%, or 6% fully accounting for one-time merger charges.

The deal is expected to close later this year, pending regulatory approval.

RBC and Wachtell, Lipton, Rosen & Katz advised BB&T while Goldman Sachs along with the investment banking unit of SunTrust and Sullivan & Cromwell advised SunTrust. More broadly, he argues, "the deal represents an acknowledgment of the growing need for scale in the U.S. banking business". Both have survived decades of bank merger mania by acquiring smaller banks and expanding beyond their home states.

Southern regional banks BB&T and SunTrust are combining in $66 billion that will affect thousands of customers at two of Central Florida's five largest financial institutions. To that end, an innovation and technology center will be based in Charlotte. SunTrust shareholders will receive a 5% increase in their dividend upon consummation of the transaction based upon each Company's current dividend per share.

Winston-Salem, N.C. -based BB&T, which has had several names since it was founded in the aftermath of the Civil War, and SunTrust, chartered in Georgia in 1891, have been direct competitors in many cities. BB&T shareholders will own about 57 percent of the combined company and SunTrust shareholders will own the rest - creating roughly a merger of equals. BB&T has always been based in Winston-Salem, N.C., while SunTrust is based in Atlanta. He estimated divestitures at approximately $1 billion.

King will serve as chairman and CEO of the combined business until September 12, 2021.

SunTrust's chairman and CEO, William Rogers, will take on the roles of president and chief operating officer at the new company and then become CEO when King transitions to executive chairman, according to the statement. After that, he'll serve a further six months as executive chairman. He'll serve on the board until the end of 2023.

Shares of SunTrust climbed 5.6 percent before the market open, while BB&T's stock rose slightly.