Magazine article American Banker

SunTrust's Stock Soars on New Talk of Wachovia Deal

Magazine article American Banker

SunTrust's Stock Soars on New Talk of Wachovia Deal

Article excerpt

Shares of SunTrust Banks Inc., which reached new highs in recent days on news of an aggressive bid for consumer deposits, surged further Thursday amid renewed rumors it might merge with Wachovia Corp.

By the close of trading, the Atlanta bank's shares were at $74 a share, up $2.75. Wachovia shares also gained to close at $47.625, up $1.875.

Traders attributed the activity to merger rumors and to anticipation of a speech scheduled today by SunTrust chief financial officer John Spiegel for an analyst conference in Coral Gables, Fla. SunTrust said the New York Stock Exchange was inquiring into the unusual trading but declined to comment further.

"If the merger isn't true, it's a shame," said Raymond James Inc. analyst Richard X. Bove. SunTrust's deposit-gathering prowess makes it a perfect match for Winston-Salem, N.C.-based Wachovia's "massive asset-generating capacity," Mr. Bove said.

But Mr. Bove also said merger-happy investors could be in for a disappointment if a deal is announced.

A deal between Wachovia and SunTrust probably would be a merger of equals, with no premium to either company's shareholders, he said. With both banks' stock prices currently inflated by merger speculation, the prices could drop on an announcement, he warned.

Analysts remained skeptical that the often rumored deal would be struck between a centralized company like Wachovia and a decentralized one like SunTrust.

"While it looks like a great combination on paper, a lot of cultural issues might prevent that from happening," said Christopher Martel at Dean Witter. …

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