BB&T to Buy Susquehanna to expand in Mid-Atlantic Region


Bank holding company BB&T Corp (NYSE:BBT) said it would buy Susquehanna Bancshares Inc (NASDAQ:SUSQ) in a cash-and-stock deal valued at about $2.5 billion to expand in the U.S. mid-Atlantic region.

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The deal comes at a time when small U.S. banks are consolidating as higher regulatory costs and historically low interest rates add to the cost of doing business.

However, banking deals of over $1 billion have been rare since the 2008 financial crisis amid concerns that some banks have become too big to fail as well as too complex, posing a threat to taxpayers and the banking system.

M&T Bank Corp's planned $3.7 billion purchase of Hudson City Bancorp Inc , announced in August 2012, is yet to close as the deal ran into trouble after the Federal Reserve raised concerns about M&T's anti-money laundering procedures.

Susquehanna shareholders will receive 0.253 shares of BB&T and $4.05 in cash for each share held, valuing the deal at $13.74 per share based on BB&T's closing price on Tuesday.

Shares of Lititz, Pennsylvania-based Susquehanna, which had a market value of about $1.8 billion as of Oct. 31, were up 34 percent at $13.30 premarket.

BB&T shares were down 5.3 percent at $36.29.

BB&T, based in Winston-Salem, North Carolina, said it expected to incur pre-tax merger costs of about $250 million and achieve annual cost savings of about $160 million.

The company said the acquisition would add to its earnings in the first full year after its completion.

BB&T agreed to buy 41 branches in Texas from Citigroup Inc in September after buying 21 branches in the state in December, boosting the number of its branches there to 123 with $5.3 billion of deposits.

BB&T operates in 12 U.S. states and Washington, D.C., while Susquehanna has branches in Pennsylvania, Maryland, New Jersey, and West Virginia.

Deutsche Bank Securities served as financial adviser to BB&T, while Keefe, Bruyette & Woods advised Susquehanna.

Wachtell, Lipton, Rosen & Katz and Sullivan & Cromwell LLP served as legal counsels to BB&T and Susquehanna, respectively.

(Reporting by Amrutha Gayathri in Bangalore; Editing by Saumyadeb Chakrabarty and Maju Samuel)