BB&T Corp. (BBT) and SunTrust Banks plan to combine in an all-share deal valued at about $66 billion in the biggest global bank merger for more than a decade. Thursday’s BB&T-SunTrust deal would create the sixth-largest bank in the U.S. BB&T stock and SunTrust stock rose before the open in Thursday’s stock market.
SunTrust shareholders will receive 1.295 shares of BB&T for each SunTrust share they own, the companies said. That represents a premium of about 7% above SunTrust’s last closing price. SunTrust stock rose 7.25% to 63 early in Thursday’s stock market. BB&T climbed 3.7% to 50.34.
Shareholders of Winston-Salem, North Carolina-based BB&T will own approximately 57% of the combined company and Atlanta-based SunTrust’s holders will own about 43%.
BB&T has agreed to pay $28.1 billion for SunTrust’s equity as of Wednesday’s closing price, according to data compiled by Bloomberg. The deal also includes almost $18 billion in net debt, the data show.
BB&T-SunTrust Deal Touts Cost Savings
The BB&T-SunTrust deal will deliver at least $1.6 billion in annual cost savings by 2022, the companies said. The combined company will operate under a new name and have its headquarters in Charlotte, North Carolina.
Kelly King, chairman and CEO of BB&T, will serve as CEO of the combined company through Sept. 12, 2021. After that, he’ll serve a further six months as executive chairman.
Industry executives have long predicted a wave of bank mergers that’s so far played out only in smaller or mid-sized deals. Bank of America (BAC) CEO Brian Moynihan last month said another round of consolidation in the U.S. could lead to the emergence of a new competitor.
Ernst & Young expects a flurry of transactions this year, fueled by easing regulations and the U.S. tax overhaul, which helped lenders build a war chest to spend on acquiring new clients and technology, the financial advisory firm said in a report last month. The value of mergers and acquisitions in the U.S. financial-services sector more than doubled to $196.5 billion in 2018 from $82.3 billion in 2017, EY said.
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