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BB&T to Acquire Susquehanna Bancshares

November 12, 2014, 08:04 AM
Filed Under: Mergers & Acquisitions
Related: Banking News, BB&T

BB&T Corporation and Susquehanna Bancshares, Inc. announced today the signing of a definitive agreement under which BB&T will acquire Susquehanna in a cash and stock transaction for total consideration valued at approximately $2.5 billion. This acquisition will significantly expand BB&T's footprint in the Mid-Atlantic region and improve its ranking to #5 in Maryland.

Susquehanna, headquartered in Lititz, Pa., is a top 50 bank in the U.S. with $18.6 billion in assets, $13.6 billion in deposits and 245 banking offices in Pennsylvania, Maryland, New Jersey, and West Virginia.

"We are extremely excited to welcome our new clients and associates in these attractive markets to BB&T. Susquehanna's culture, commitment to its communities and business model are a strong fit with BB&T," said Chairman and Chief Executive Officer Kelly S. King.

"We look forward to being a part of BB&T's storied franchise," said William J. Reuter, Susquehanna's Chairman and Chief Executive Officer. "BB&T's expanded product offerings and resources combined with a stronger balance sheet will enable us to better serve our clients, associates and communities."

In connection with the acquisition, BB&T plans to establish three new banking regions encompassing certain markets in Pennsylvania and New Jersey. BB&T also plans to integrate its Baltimore region with Susquehanna's. These four regions are expected to be led by legacy Susquehanna executives.  BB&T operates its community banking client service model through banking regions that drive faster, simpler, more effective client service.

"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. The diversity of our markets is a key element of our long-term success," said King.

BB&T is very pleased that William J. Reuter and Christine Sears, current Susquehanna Board members, will join BB&T's Board of Directors upon closing of the transaction.  BB&T plans to continue Susquehanna's tradition of commitment and service to its communities by creating a $10 million economic development fund to ensure ongoing support of the Lancaster, Pennsylvania community.

Under the terms of the agreement, which was approved by the Board of Directors of each company, shareholders of Susquehanna will receive as merger consideration 0.253 shares of BB&T common stock and $4.05 in cash for each share of Susquehanna common stock.  The merger consideration is valued at $13.50 per share based on the average closing price of BB&T over the 45 trading days ending on November 10, 2014.

BB&T expects to incur pre-tax merger and integration costs of approximately $250 million and expects to achieve annual cost savings of approximately $160 million (approximately 32% of Susquehanna's non-interest expenses).  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.

This acquisition is subject to customary closing conditions including regulatory approvals and approval of Susquehanna shareholders.

Deutsche Bank Securities Inc. served as financial advisor to BB&T.  Wachtell, Lipton, Rosen & Katz served as legal counsel to BB&T in this transaction.

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