The banks said Thursday that the combined company will be the sixth-largest USA bank based on assets and deposits.
BB&T is merging with SunTrust, in a deal worth some $66 billion. "This gives us the opportunity to be absolutely the most competitive bank".
Analysts largely expect regulators to approve the deal, although it will likely draw scrutiny from vocal bank critics like USA senators Elizabeth Warren and Bernie Sanders.
"This is an all-stock deal", said Sam Stovall of CFRA. Regional bank stocks, including KeyCorp, Comerica Inc and Regions Financial rallied on Thursday.
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".
The two banks have hundreds of branches within two miles of each other, but they serve different segments of the market. SunTrust shareholders will receive a 5% increase in their dividend upon consummation of the transaction based upon each Company's current dividend per share. Most bank mergers stopped after the crisis because the banks had to clean up their balance sheets, and the regulatory environment under the Obama administration made mergers more hard.
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GAAP and Cash EPS accretion per BB&T share in 2021 is expected to be approximately 13% and 17%, respectively (based on Street estimates).
Changes in US tax laws have lowered corporate taxes, freeing up capital, and Wall Street has always been expecting a wave of dealmaking in banking.
The two banks have a combined 92 offices in Central Florida and control $12.8 billion of deposits in Central Florida, according to the Federal Deposit Insurance Corp. 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. BB&T shareholders will own about 57 percent and SunTrust shareholders will own about 43 percent of the business.
The deal pays SunTrust shareholders 1.295 BB&T shares for each SunTrust share they own, according to a joint statement released Thursday morning. "So ultimately, (it) should get done".
BB&T Chairman and chief executive officer Kelly King called the deal a "true merger of equals" in prepared remarks.
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.
The new company will be lead with BB&T Chairman and Chief Executive Officer Kelly S. King as the new company's Chairman and Chief Executive Office until September 12, 2021.