BB&T Corp to buy SunTrust Banks for $28 billion in stock

BB&T Corp to buy SunTrust Banks for $28 billion in stock

The only bank with the size and scale of the new merged BB&T-SunTrust would be Minneapolis-based U.S. Bank, which has a large presence in the Midwest and Rocky Mountains. The company will create an "Innovation and Technology Center" in its new headquarters, and the statement on the deal used the words technology, digital and innovation more than a dozen times. The former community banking centers of both companies will remain in operation in Winston-Salem and Atlanta. David White, BB&T's vice president for corporate communications, could not immediately say if the merger would affect a planned $20 million facility in Whiteville that the bank announced in October. According to the press release, the merger is expected to create double-digit earnings per share for stockholders by accretion by 2021. GAAP and Cash EPS accretion per SunTrust share in 2021 is expected to be approximately 9% and 16%, respectively (based on Street estimates).

Shares of SunTrust jumped more than 10 percent Thursday to close at $64.72, while BB&T's stock rose almost 4 percent to close at $50.46.

The transaction, which was described by some leading financial media as a BB&T acquisition of SunTrust, will entail a swap of 1.295 BB&T shares for each share of SunTrust. BB&T shareholders will own about 57 percent of the combined company.

It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services. SunTrust's current chairman and CEO, William Rogers, will serve as the combined bank's president and COO until then. I have tremendous respect for Kelly, his leadership team and the BB&T associates.

BB&T shareholders were pleased. Savings will come from facilities, IT systems, shared service, retail banking, and third-party vendors.

UBS bank analyst Saul Martinez said in a note to clients that "at first blush, this looks like a good deal for BB&T", given both the financial terms of the deal and the fact that SunTrust's "footprint is in higher income and household density markets". It will create the sixth-largest bank in the United States, with assets of $442bn and deposits of $324bn, according to a statement.

King will serve as CEO of the combined company through September 12, 2021, when Rogers will take over.

Upon the closing of the transaction, the board of directors will consist of members equally split between BB&T and SunTrust's current directors. They include Chris Henson, Clarke Starnes (Chief Risk Officer), Daryl Bible (Chief Financial Officer), Allison Dukes, Brant Standridge, David Weaver, Dontá Wilson, Ellen Fitzsimmons, Ellen Koebler, Hugh (Beau) Cummins, Joseph Thompson and Scott Case. And Ernst & Young said it expects a flurry of transactions this year, fueled by easing regulations and the US tax overhaul, which helped lenders build a war chest to spend on acquiring new clients and technology.

RBC Capital Markets was sole financial adviser to BB&T.