BB&T Corp. (BBT.N) plans to acquire SunTrust Banks Inc. (STI.N) in an all-share deal valued at about US$66 billion in the biggest global bank merger for more than a decade, which will create the sixth-largest bank in the U.S.
SunTrust shareholders will receive 1.295 shares of BB&T for each SunTrust share they own, the companies said in a joint statement on Thursday. Shareholders of Winston-Salem, North Carolina-based BB&T will own approximately 57 per cent of the combined company and Atlanta-based SunTrust’s holders will own about 43 per cent.
BB&T has agreed to pay US$28.1 billion for SunTrust’s equity as of Wednesday’s closing price, according to data compiled by Bloomberg. The deal also includes almost US$18 billion in net debt, the data show.
That represents a premium of about 7 per cent above SunTrust’s last closing price.
The transaction will deliver at least US$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 S. King, chairman and chief executive officer 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 Corp. Chief Executive Officer 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 US$196.5 billion in 2018 from US$82.3 billion in 2017, EY said.