United States banks BB&T and SunTrust announce $66 billion merger

Jeannie Matthews
February 8, 2019

BB&T shareholders will own 57% of the new entity, while those of SunTrust receive 43%. The new bank, which would have its headquarters in Charlotte, N.C., will be the sixth-largest in the US based on assets and deposits.

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.

On March 12, 2022, Rogers will become Chairman as well as CEO, at which point King will continue to serve on the Board of Directors until the end of 2023.

The combined company will be rebranded and establish a new headquarters in Charlotte, North Carolina. Their combination will push them up to third with $8.3 billion in deposits, leapfrogging PNC and Wells Fargo, but still behind Bank of America and M&T. Rogers will be president and chief operating officer.

The deal "could be prescient of similarly-sized transactions, particularly in the $100-$250B asset range, as banks seek to scale to compete with larger banks", said CFRA Research analyst Harrison Webster.

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".

BB&T, founded in the aftermath of the Civil War, and SunTrust, chartered in Georgia in 1891, had been direct competitors in many cities.

Even with the added size, the company will represent only about a third of the lending and deposit portfolios of the largest U.S. banks such as JPMorgan Chase and Bank of America. In the current home markets for both companies, the combined company will maintain the Community Banking Center in Winston-Salem, NC and the Wholesale Banking Center in Atlanta, GA.

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Shares of both companies soared on the announcement, which establishes the sixth-largest bank in the country by assets and deposits, and follows President Donald Trump's moves to cut corporate taxes and ease banking regulations imposed after the 2008 crisis.

"It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services", BB&T CEO Kelly King said in a statement.

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.

The two companies called it a merger of equals, valued at $66 billion.

Executives said they did not expect regulators to demand significant divestitures and that the deal would close in the fourth quarter of 2019.

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. King will serve a further six months as executive chairman.

RBC and Wachtell, Lipton, Rosen & Katz advised BB&T while Goldman Sachs along with the investment banking unit of SunTrust and Sullivan & Cromwell advised SunTrust.

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