BB&T and Sun Trust Bank Merger
BB&T and Sun Trust bank are both giant institutions in their own right. However, now since they have decided to merge, another mega-bank is likely to come into existence in America. Both these banks have been in operation for over 100 years, hence have their own heritage. Financial analysts are not clear on whether the merger is good for the overall economy. In this article, we will have a look at some of the positive and negative points raised in the debate.
The Details of the Merger
The merger between BB&T and Sun Trust bank is being called a merger of equals. The merger will create a combined entity which is likely to have a net worth of $66 billion. The combined entity will hold over $400 billion in assets. It will also hold close to $330 billion in savings from more than 10 million households in America. The combined entity will end up being the sixth largest entity in the country. This banking merger is going to be the largest since the economic crisis of 2009.
The merger between the two companies is an all-stock deal. This comes as a surprise because Trumps recent tax breaks have freed up a lot of cash at the banks. Analysts were expecting that some of this cash would make it to these acquisition deals. The combined entity will come up with a new name. Also, the headquarters will be located in a different place.
SunTrust bank currently has its headquarters located at Atlanta, Georgia whereas BB&T has its headquarters located at Winston-Salem, North Carolina. It is rumoured that the new combined entity will be based out of Charlotte North Carolina which has a well-developed banking infrastructure since it already houses Bank of America.
A Merger of Equals
The term merger of equals is being used a lot. However, analysts are really doubtful about whether this is indeed a merger of equals. This is because the fact of the matter is that BB&T will end up having more control over the entity than Sun Trust.
BB&T will own 57% of the new entity and hence will exercise more control over it. This is strange because of the fact that both Sun Trust and BB&T have equal assets in the ballpark of $210 billion. However, at the present moment, the shares of BB&T are selling at a premium in the market. This is the reason behind the higher valuation received.
What Caused The Merger?
The main driving factors behind these mergers have been listed down.
Negative Effects of the Merger
There are many negative points as well. Some have been listed below.
Authorship/Referencing - About the Author(s)
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