The financial sector caught some acquisition news today, as it was announced that BB&T Corporation (NYSE:BBT) had struck a deal with Susquehanna Bancshares Inc (NASDAQ:SUSQ) to acquire the business in a $2.5 billion deal in stock and cash, effectively becoming one of the largest banking deals since the 2008 crisis. The offer values Susquehanna Bancshares at $13.75 a share, over 30% since yesterday’s close. The purchase comes as BB&T Corporation looks to continue its east coast growth and increase in market share. Susquehanna is a prominent financial establishment with operations in Pennsylvania, Maryland, New Jersey, and West Virginia.
As the announcement, Susquehanna Bancshares had over $18 billion listed in assets and $13 billion deposits. The new company will feature Susquehanna’s CEO William J. Reuter and director Christine Sears added to the board of directors of BB&T. Analysts estimate that the deal will give BB&T one time charges totaling up to around $250 million to integrate Susquehanna’s business and assets into the BB&T family. However, analysts did estimate that once the acquisition is complete, it could bring about $160 million in yearly savings for the company. In early US trading, Susquehanna Bancshares are seeing shares up 33%, while BB&T Corporation is down a minor -1.67%.
BB&T Corporation: Susquehanna expands our franchise into a contiguous
BB&T Corporation (NYSE:BBT) operates primarily in the Southeast portion of the US and this acquisition allows the company to establish themselves with a foot in the door further north along the east coast. “Similar to our recently announced market expansion acquisitions in the Dallas, Houston and Cincinnati markets, Susquehanna expands our franchise into a contiguous, attractive region that presents an exciting opportunity for us,” comments Kelly King, BB&T CEO on the deal (Yahoo Finance).
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BB&T Corporation shows some decent fundamentals: price to earnings of 14 and price to forward earnings of 12.44. Additionally, the company has a debt to equity ratio of 1.03 and cash per share of 3.66, giving the bank a stable financial standing and the ability to pay its 2.50% dividend. Sales, quarter over quarter, are down -6%, but earnings per share rose nearly 92% during the same period. The bank sees earnings growth of over 20% over the next six years and margins are excellent, particularly the bank’s 32% profit margin.
BB&T seeing expansion opportunities across US
Overall, BB&T Corporation (NYSE:BBT) continues to see opportunities in expansion across the southern US and the northeast US, too prominent areas of the country that could help bring nice growth to the bank’s underlying earnings over the long term. The deal has been approved by both board of directors of each company, but the deal still requires approval from US regulators and Susquehanna shareholders. In all likelihood, the deal should be approved and able to progress forward. BB&T may be paying a bit of a premium of over 30% for Susquehanna, but the long term potential certainly outweighs the current costs of the deal.