BB&T Pays Up to Keep Expanding With Acquisitions

BB&T announced on Tuesday that it has signed a definitive agreement to acquire National Penn for roughly $1.8 billion. The deal is shown to be cash and stock, and it would compare to a $29.3 billion market cap of BB&T.

BB&T said that this would significantly expand the bank’s footprint in the Mid-Atlantic region. It would also improve its deposit market share to the number-four ranking in Pennsylvania.

So, what does $1.8 billion really buy? National Penn is headquartered in Allentown, Pennsylvania. It counts some $9.6 billion in assets, $6.7 billion in deposits and 124 banking offices in Pennsylvania, New Jersey and Maryland. After its 17% stock price gap-up in share price, the market cap is counted as almost $1.8 billion as well.

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BB&T expects to incur pretax merger and integration costs of approximately $100 million and expects to achieve annual cost savings of approximately $65 million. BB&T expects this acquisition to be accretive to earnings per share in the first full year excluding one-time charges and expects the transaction to exceed its IRR hurdle. Terms of the $1.8 billion deal will consist of 70% payment in BB&T common stock and 30% payment in cash. The banks outlined the deal terms as follows:

National Penn stockholders can elect to receive 0.3206 of a share of BB&T common stock or $13.00 in cash for each share of National Penn common stock, subject to proration such that total consideration will consist of approximately $550 million in cash and approximately 31.6 million BB&T common shares. The merger consideration is valued at $13.00 per share based on the average closing price of BB&T over the 20 trading days ending on August 17, 2015.

As far as how much BB&T will have grown from 2014 to 2015 — or 2016 — it will be substantial. The closing of the Susquehanna acquisition took place on August 3 after having been announced last November. It was a stock and cash deal valued at roughly $2.5 billion. That deal brought on more than 240 branches in Pennsylvania, Maryland, New Jersey and West Virginia. It was to give BB&T some 2,138 financial centers throughout its footprint. The merger included roughly $13.8 billion in deposits, and total assets of $18.7 billion.

During the closure of the Susquehanna deal, BB&T had also announced that it would create three new geographic banking regions — Western Maryland and Pennsylvania, Central Pennsylvania and the Greater Delaware Valley regions.

National Penn Bancshares stock was up 16.7% at $12.74 in midday trading on Tuesday. BB&T shares were down 0.6% at $39.95 in midday trading on Tuesday.

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