BB&T Corporation (BBT) announced the signing of an agreement to acquire Florida-based BankAtlantic, a wholly-owned subsidiary of BankAtlantic Bancorp Inc. (BBX). The transaction would allow the company to fast track its expansion strategy in Florida region.
Under the terms of the deal, BB&T will acquire $2.1 billion in loans and roughly $3.3 billion in deposits (90% core and low-cost funds) for $301 million premium, representing 9.05% of the deposits at BankAtlantic on September 30, plus the net asset value of the bank. However, deposit premium could rise or fall based on the amount of deposits at BankAtlantic prior to the closing of deal, not exceeding $315.9 million.
Though BFC Financial Corporation (BFCF), the major shareholder of BankAtlantic Bancorp’s Class A common stock, supports this deal, the agreement still is subject to regulatory approvals and customary closing conditions. Furthermore, both the companies have not specified the time of closure of the transaction.
Upon the closure, the deal will be accretive to BB&T’s earnings per share in 2012 excluding one-time acquisition expenses. This would add 78 branches to BB&T’s 64 branch network in Florida region. However, the agreement excludes BankAtlantic Bancorp's nonperforming and other criticized assets identified as of September 30.
Our Viewpoint
BB&T relies extensively on acquisitions to expand its revenue streams. Following the systems conversion of Colonial in the first half of 2010, the company is retaining capital to grab acquisition opportunities. Recently, the company bought – Atlantic Risk Management and Liberty Benefit Insurance Services.
Though BB&T mainly focuses on organic growth strategy, the company has never been averse to expand its market share through acquisitions. Going forward, management expects to maintain this balanced growth structure.
BB&T currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.
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