Magazine article American Banker

South Financial's Fortunes Soar on Merger Rumors

Magazine article American Banker

South Financial's Fortunes Soar on Merger Rumors

Article excerpt

Is South Financial Group the next target for BB&T Corp.?

Some shareholders of Columbia, S.C.-based South Financial apparently think so.

Over the last two weeks, South Financial's stock has been unusually active, trading at three times its average volume and at one point cracking the $19 barrier for the first time since late 1999. The surge has been spurred by rumors that $63.7 billion-asset BB&T has its sights set on South Financial, South Carolina's largest banking company, with $5.2 billion of assets.

On May 30, The State, a Columbia newspaper, published a story that suggested the two companies were in merger talks. Since then the online message boards for both companies have been flooded with merger chatter, with some projecting that a union would be announced last Friday. That was the heaviest trading day in two weeks for South Financial, when its stock hit $19.

South Financial's stock retreated a bit Thursday, dropping 3.2%, to $17.43.

Neither Winston-Salem, N.C.-based BB&T nor South Financial would comment on the rumored acquisition or on any other speculation about the two companies.

However, Chris Kelley, an analyst with Morgan Keegan & Co. in Memphis, said that South Financial fits BB&T's acquisition profile: a southern bank with less than $10 billion of assets. It is no secret that BB&T, which has made five purchases in the past year and has two others pending, is hungry for more. These two factors probably produced the rumors, Mr. …

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