BB&T Corp. (NYSE: BBT) announced Wednesday morning that it will acquire Susquehanna Bancshares Inc. (NASDAQ: SUSQ) in a $2.5 billion agreement. The deal is a cash-and-stock one in which Susquehanna shareholders will receive 0.253 shares of BB&T and $4.05 in cash for each share held. This deal would value Susquehanna at $13.75 per share, based on Tuesday’s closing price of BB&T.
Tuesday’s closing price for Susquehanna was $9.90, which would place it at a 39% premium, considering the value for it was pegged at $13.75 in the terms of this buyout. Shares of Susquehanna were trading up about 33% at $13.16 coming into the noon hour Wednesday. Susquehanna had a consensus analyst price target of $10.30 and a 52-week trading range of $9.00 to $13.24. Its total market cap is over $2 billion.
As for the costs of this acquisition, BB&T expects pretax merger and integration costs of roughly $250 million. However, the company expects that this deal will save around $160 million in annual costs going forward.
Shares of BB&T traded down 2% at $37.55 following news of the acquisition. The consensus analyst price target is $40.84, and the 52-week trading range is $32.85 to $41.04. BB&T has a market cap near $27 billion.
Susquehanna is a regional financial services holding company that claims to have approximately $18 billion in assets. It includes a commercial bank that provides financial services through more than 240 locations in the Mid-Atlantic region. The company offers investment, fiduciary, brokerage, insurance, retirement planning and private banking services. Susquehanna also operates an insurance and employee benefits company, a commercial finance company, a vehicle leasing company, a mortgage division and a settlement services company.
BB&T is one of the largest financial services holding companies in the United States, with $184.7 billion in assets. It offers a range of consumer and commercial banking, brokerage, asset management, mortgage and insurance products services.
The larger question looms: will this merger beget more bank and financial mergers?