BB&T and SunTrust agree to combine in US$66 billion merger

Reuters  Jim Young

Other regional bank stocks rose on the news of the transaction: Comerica (CMA) was up nearly 6%; Fifth Third (FITB) was up 3%; Huntington Bancshares (HBAN) was up nearly 5%; and Citizens Financial (CFG) was up more than 4%.

Wall Street apparently agrees: Shares of SunTrust jumped 11.5 percent in premarket trading Thursday morning, while BB&T's stock climbed 5.2 percent. BB&T has more than 1,800 financial centers in 15 states and Washington, D.C.; SunTrust has an extensive network of branches, along with corporate and investment banking operations.

SunTrust shares have been down about 10% over the past year, while BB&T had lost nearly 5% during the same time.

More pertinent is a plan by the Federal Reserve to create different ways of regulating banks with less than $700 billion in assets, seen by some as an indication that the Fed will loosen its scrutiny of regional banks. It could prompt bank managements to more actively consider deals. he said.

Large US banks keep growing.

McEvoy said he expects the market's positive reaction to the deal to drive similar transactions throughout the year. The value of mergers and acquisitions in the USA financial-services sector more than doubled to US$196.5 billion in 2018 from US$82.3 billion in 2017, EY said.

The talks between the two banks began in 2018, according to advisers.

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BB&T and SunTrust have about 740 branches within two miles of each other, or about 24 percent of all branch locations run by the banks. BB&T has always been based in Winston-Salem, N.C., while SunTrust is based in Atlanta.

Changes in USA tax laws have lowered corporate taxes, freeing up capital, and Wall Street has always been expecting a wave of dealmaking in banking. Approvals are still needed from regulators and shareholders of each bank.

Under the terms of the deal, SunTrust shareholders will receive 1.295 shares of BB&T for each share they own. BB&T shareholders will own approximately 57% and SunTrust shareholders will own approximately 43% of the combined company. 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. "So ultimately, (it) should get done".

Both companies' boards of directors unanimously approved an agreement to come together in an all-stock merger of equals valued at about $66 billion.

William H. Rogers, Jr., Chairman and Chief Executive Officer of SunTrust will serve as President and Chief Operating Officer of the combined company and its bank subsidiary until September 12, 2021, at which time he will become Chief Executive Officer of the combined company and its bank subsidiary.

In December, BB&T said it was eliminating its Center City Allentown regional headquarters as well as positions held by Scott V. Fainor and David B. Kennedy, former executives at National Penn Bancshares and longtime Lehigh Valley bankers.

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