BB&T Corp will buy SunTrust Banks Inc for about $28 billion in an all-stock deal, the companies said on Thursday, creating the sixth largest US lender in the biggest bank deal since the 2007-2009 financial crisis.
The two companies called it a merger of equals, valued at $66 billion.
The combined company will operate under a new name and have around $442 billion in assets, $301 billion in loans and $324 billion in deposits, and will rival Citigroup Inc and Bank of America Corp.
The deal comes at a time when the Trump administration is pushing for easing crisis-era regulations that restricted expansion and added increased regulatory scrutiny on big banks.
Added to that, changes in the US tax laws that lowered corporate tax also freed up capital and Wall Street has long been expecting a wave of dealmaking in the banking sector.
As part of the deal, SunTrust shareholders will receive 1.295 shares of BB&T for each share they own. The per share deal value of $62.85 is at a 7 per cent premium to SunTrust's closing price on Wednesday, according to a Reuters calculation.
Atlanta-based SunTrust rose 5.5 per cent to $62 before the opening bell, a few cents short of its acquisition price.
BB&T shareholders will own 57 per cent of the combined company and SunTrust will own the rest.
The deal, expected to close in the fourth quarter, will likely result in annual cost savings of around $1.6 billion by 2022, the companies said. The merger is will generate an internal rate of return of about 18 per cent.
Kelly King, BB&T's chief executive officer, will be the CEO of the combined company until September 12, 2021, after which SunTrust CEO, William Rogers Jr, will take over.