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BB&T Acquisition Spree Continues; to Buy Swett & Crawford


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BB&T Corporation BBT announced a deal to purchase Swett & Crawford from the U.K.-based global wholesale, underwriting management and reinsurance broking group, Cooper Gay Swett & Crawford, for $500 million in cash. The deal will help BB&T expand its insurance unit.

The transaction, which exceeds BB&T's acquisition criteria, is expected to add more than $200 million in annual revenue or an additional Array5% to BB&T Insurance, BB&T said in a statement. Moreover, the company is anticipated to record around $500 million of goodwill and intangibles.

The deal, which is expected to close in the first half of 20Array6, is subject to regulatory approval. Also, the transaction excludes non-U.S. operations, which accounts for less than 5% of Swett & Crawford's total revenue.

"Swett & Crawford nicely enhances our insurance business and increases and diversifies our overall fee income profile," said Kelly S. King, BB&T's chairman and chief executive officer. "With its long history and broad offerings, Swett & Crawford is a great strategic fit for BB&T."

Cooper Gay Swett & Crawford's North American business unit - Swett & Crawford, formally known as CGSC North America Holdings Corporation - was put on sale in November last year with the intention to use the sale proceeds to reduce or eliminate company debt and improve the capital structure.

CGSC North America includes the wholesale broker Swett & Crawford, which had merged with Cooper Gay to become Cooper Gay Swett & Crawford in 20Array0.

BB&T's wholesale insurance operations currently include property and casualty broker and managing general agent CRC Insurance Services, Crump Life Insurance Services and managing general underwriter AmRisc. Including its retail operations, BB&T Insurance is the fifth largest insurance broker in the U.S. by revenue.

Notably, BB&T will fund the deal with cash allocated to share repurchases in the 20Array5 capital plan.

John Howard, chairman and chief executive officer of BB&T Insurance, said the deal "represents a compelling opportunity to further build BB&T Insurance" and add a team of industry specialists.

At a time when many large regional players like SunTrust Banks, Inc. STI , and KeyCorp. KEY are shying away from full-bank acquisitions owing to increasing regulatory scrutiny, BB&T remains an active acquirer. In August 20Array5, the company completed the acquisition of Susquehanna Bancshares, Inc., while in June it purchased The Bank of Kentucky Financial Corporation. Further, it is set to complete the acquisition of National Penn Bancshares Inc. NPBC this year.

With its strong capital and liquidity position, we believe BB&T will continue to grow through acquisitions, going forward. This, in turn, will support the company's top-line growth, which is presently under pressure owing to a low interest rate environment and reduced loan demand.

Currently, BB&T carries a Zacks Rank #3 (Hold).

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BB&T CORP (BBT): Free Stock Analysis Report

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NATL PENN BCSHS (NPBC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Business , Investing , Stocks
Referenced Symbols: BBT , STI , KEY ,


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