BB&T Acquires BankAtlantic

By Benzinga | May 01, 2012 AAA

It was revealed on Tuesday that BB&T (NYSE: BBT) amended the agreement to acquire BankAtlantic Bancorp (NYSE: BBX), the Florida-based bank subsidiary, in order to address litigation challenges. The core provisions are unchanged.

According to Reuters, the modified agreement will see BB&T assume BBX's obligations relating to $285 million worth of trust preferred securities. BBX will pay the accrued interest on those securities.

The tradeoff is that BBT will receive a 95% interest in a new limited liability company which will include a $423 million pool of loans and $17 million of other net assets.

"We believe this amendment to our original agreement fully addresses litigation obstacles and allows the transaction to move forward," BB&T Chief Executive Kelly King said

BBT believes that that the approximate recoverable principal value of the LLC is $350 million. The deal to buy BBX was made in November, with $3.3 billion in deposits, and it will pay around $301 million above the net asset value of BankAtlantic at closing.

BBT shares closed at $29.31 on Monday, with BBX closing at $1.93.

On March 7, Citi released a research report following C's Financial Services Conference, stating that BB&T Chairman & CEO Kelly King discussed the bank's values-driven, client focused business model, highlighting BB&T's balance between its core banking and non-core, strategic businesses (e.g. insurance brokerage) to deliver the benefits of diversified revenue sources through-the-cycle. Management also discussed BB&T's strong returns and earnings power relative to peers, recent commercial lending market share gains and the benefits of the recent Crump insurance brokerage acquisition.

"King expects BB&T to see continued strong loan growth in 1Q12, reiterating prior guidance average loan balances to increase by 5-7%," the report said. "He also noted that they have seen some competitive pressure on pricing, but also reported that BB&T is gaining share in several markets with ~80% of loan growth seen as being take-away business from competitors."

Back on February 28, Morgan Stanley said that BBX's agreement to sell most of its assets to BBT was barred by the Delaware Chancery Court as currently structured, on the grounds that the terms of the deal were detrimental to BankAtlantic TRUP-holders. "Given that the deal excluded all non-deposit BankAtlantic obligations and all NPAs/criticized assets, BankAtlantic TRUP-holders had objected stating that the deal would leave them holding a stake in an entity with substantially lower quality assets and lower earnings."

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