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SunTrust to acquire NCFC for $7 bn
New York, May 10: SunTrust Banks Inc. said on Sunday that it agreed to acquire National Commerce Financial Corp. for nearly $7 billion in cash and stock, bolstering the bank`s footprint in the fast-growing southeastern United States.
New York, May 10: SunTrust Banks Inc. said on Sunday that it agreed to acquire National Commerce Financial Corp. for nearly $7 billion in cash and stock, bolstering the bank's footprint in the fast-growing southeastern United States.
The deal, the second major US bank merger announced in the past week, would create a top 10 US bank with $148 billion in assets. This marks the first major acquisition by Atlanta-based SunTrust since it lost a bidding war for Wachovia Corp. to rival First Union in 2001.
It also becomes the latest billion-dollar merger announced in the deal-hungry US banking sector this year. With nearly 10,000 banks and thrifts nationwide, the US banking sector remains one of the world's most fragmented, a fact analysts believe should bring several more significant deals as large US and foreign banks look to offset slowing revenue streams.
"This deal was not about simply getting bigger," SunTrust spokesman Barry Koling said.
The combination will strengthen SunTrust's business in some parts of Tennessee and give it access to new markets in that state, as well as in North and South Carolina, Koling said. SunTrust said the deal presented natural synergies because it expanded the bank's geographic reach without a significant overlap of branches while adding an institution that promoted a similar regional banking model.
Still, SunTrust faced stiff competition to buy National Commerce, based in Memphis, Tennessee, from Fifth Third Bancorp, according to sources familiar with the situation.
Fifth Third, based in Cincinnati, Ohio, has started to aggressively pursue acquisitions again after emerging recently from a regulatory moratorium on acquisitions and, analysts noted, it has been particularly interested in expanding into Tennessee.
That helped drive up the price for National Commerce during the last week, sources noted, resulting in a fairly rich acquisition price.
In fact, the bidding war's ultimate winner remained in doubt until the very end, when National Commerce's board chose SunTrust's offer over an equally-valued offer from Fifth Third, according to one source close to the situation.
Bureau Report
The deal, the second major US bank merger announced in the past week, would create a top 10 US bank with $148 billion in assets. This marks the first major acquisition by Atlanta-based SunTrust since it lost a bidding war for Wachovia Corp. to rival First Union in 2001.
It also becomes the latest billion-dollar merger announced in the deal-hungry US banking sector this year. With nearly 10,000 banks and thrifts nationwide, the US banking sector remains one of the world's most fragmented, a fact analysts believe should bring several more significant deals as large US and foreign banks look to offset slowing revenue streams.
"This deal was not about simply getting bigger," SunTrust spokesman Barry Koling said.
The combination will strengthen SunTrust's business in some parts of Tennessee and give it access to new markets in that state, as well as in North and South Carolina, Koling said. SunTrust said the deal presented natural synergies because it expanded the bank's geographic reach without a significant overlap of branches while adding an institution that promoted a similar regional banking model.
Still, SunTrust faced stiff competition to buy National Commerce, based in Memphis, Tennessee, from Fifth Third Bancorp, according to sources familiar with the situation.
Fifth Third, based in Cincinnati, Ohio, has started to aggressively pursue acquisitions again after emerging recently from a regulatory moratorium on acquisitions and, analysts noted, it has been particularly interested in expanding into Tennessee.
That helped drive up the price for National Commerce during the last week, sources noted, resulting in a fairly rich acquisition price.
In fact, the bidding war's ultimate winner remained in doubt until the very end, when National Commerce's board chose SunTrust's offer over an equally-valued offer from Fifth Third, according to one source close to the situation.
Bureau Report