SunTrust stock is heading higher Thursday on news that it is merging with BB&T (NYSE:BBT).
The deal will have SunTrust (NYSE:STI) and BB&T combining to become the sixth largest bank in the U.S. This will also have the resulting company taking on a new name that has yet to be decided. There will also be a new headquarters for this company opening in Charlotte, N.C.
The merger between the two companies will have STI investors receiving 1.295 shares of BB&T stock for each share of SunTrust stock that they hold. This values the merger between SunTrust and BB&T at $66 billion.
Once the deal closes, SunTrust investors will own 43% of the new company and BBT investors will own the remaining 57%. There’s also another benefit for SunTrust stock holders once the merger is complete. This will be a 5% increase to the dividend that they receive.
The merger of SunTrust and BB&T will create a much stronger company. This new company will have “$442 billion in assets, $301 billion in loans, and $324 billion in deposits serving more than 10 million households in the United States.”
The deal between SunTrust and BB&T already has the unanimous approval from both companies’ Board of Directors. The deal still needs to complete customary closing conditions, as well as get approval from shareholders and regulators. If all of this goes well, the two companies are expecting the merger to close during the fourth quarter of 2019.
STI stock was up 8% and BBT stock was up 2% as of noon Thursday.
As of this writing, William White did not hold a position in any of the aforementioned securities.
