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SunTrust to acquire National Commerce for $7 billion

ATLANTA -- SunTrust Banks Inc. said yesterday it was buying Memphis-based National Commerce Financial Corp. in a nearly $7 billion cash-and-stock deal, the latest merger in the wave of consolidation sweeping the financial sector.

The companies said the combination, which followed a reported bidding war between Atlanta-based SunTrust and Cincinnati-based Fifth Third Bancorp., would create the seventh-largest US bank, with $148 billion in assets and $97 billion in deposits.

Under the terms of the $6.98 billion deal, NCF shareholders would receive $8.625 plus 0.3713 SunTrust share for each NCF share. Based on SunTrust's closing price Friday, the transaction is valued at $33.46 per NFC share -- a 5.2 percent premium above NCF's closing price on Friday. NCF shares surged 13 percent to $31.80 Friday on speculation a deal was imminent.

The pricetag includes $1.8 billion in cash with the balance in stock -- approximately 77.5 million SunTrust shares.

"National Commerce, with its great franchise, talented people, and high standards, is a superb fit for SunTrust," SunTrust chairman and chief executive L. Phillip Humann said

A conference call with investors and analysts was scheduled for this morning.

The merger follows a string of combinations in the national and regional banking business. Bank of America Corp. recently completed its $47 billion acquisition of FleetBoston Financial Corp., and the proposed $58 billion merger of J.P. Morgan Chase & Co. and Bank One Corp. is pending.

In January, Regions Financial Corp. and Union Planters Corp. agreed to merge in a $6 billion deal that creates a Southeastern banking powerhouse. The same month, Huntington Bancshares Inc. announced plans to acquire Unizan Financial Corp. in a stock deal the two companies valued at $587 million.

Analysts had previously said NCF stood to benefit from a combination with either SunTrust or Fifth Third, since each offered access to customers in different regions. Published reports last week had speculated Fifth Third and SunTrust were offering at least $6 billion. At the time, SunTrust and Fifth Third both declined to comment. Messages left yesterday seeking comment from Fifth Third were not immediately returned.

In a news release, the companies did not offer specifics about job cuts. But the banks said that they anticipated "no branch-based job eliminations" and that a "substantial majority" of other cuts would come through attrition. The new organization will have 1,723 full-service offices in 11 states plus the District of Columbia.

NCF is the holding company for National Bank of Commerce, Central Carolina Bank & Trust, and NBC Bank. It operates in Tennessee, North and South Carolina, Mississippi, Arkansas, Georgia, Virginia, and West Virginia. SunTrust operates in Florida, Georgia, Maryland, Tennessee, Virginia, and the District of Columbia.

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