RICHMOND, Va. -- Crestar Financial Corp., Virginia's last large, independent bank, is being bought by Atlanta-based SunTrust Banks Inc. in a deal valued at $8.4 billion.
The deal will create the 10th-largest bank in the United States with assets of about $88 billion. Crestar shareholders will receive 0.96 of a SunTrust share for each share of Crestar stock.
A sharp drop in SunTrust's stock after the deal was announced Monday trimmed the value of the transaction by about $1 billion to $8.4 billion.
SunTrust's shares plunged 10.8 percent, or $9.43 3/4 , to finish at $78, while Crestar's stock rose 13 percent, or $8.37 1/2 , to $72.37 1/2 . Both trade on the New York Stock Exchange.
"It was certainly a good price that they paid, so Crestar shareholders will certainly be very happy," said Holly Clark, a banking analyst with Richmond-based Scott & Stringfellow Inc. "Crestar has always been a high-performing bank and they paid a pretty high price for it, but I'm sure they will make it pay."
The merger has been approved by the boards of directors of both banks but is still subject to approval by shareholders and by banking regulators.
The two banks began talks in March, but the discussions only turned serious in the last two weeks, said Richard G. Tilghman, Crestar's chairman and chief executive officer.
Upon completion of the merger, Richmond-based Crestar will become a wholly owned subsidiary of Atlanta-based SunTrust.
The combined bank will have nearly 1,100 branches, adding Crestar's operations in Virginia, Maryland and Washington D.C. to SunTrust's branches in Florida, Georgia, Tennessee, Alabama.
SunTrust, with assets of $61.4 billion, is now the nation's 16th-largest bank while Crestar, with assets of $26.2 billion, is the 36th-largest.