Pinnacle Financial Partners Inc. shares plunged the most in more than five years after the bank agreed to combine with Synovus Financial Corp. in an all-stock transaction valued at $8.6 billion.
Some investors had expected both companies to draw acquisition interest from large regional banks, which would probably have resulted in more hefty premiums than a combination of two companies of similar size, according to Jeff Davis, managing director of financial advisory firm Mercer Capital.
“Wall Street loves acquisitions that entail a premium for a seller, and Wall Street will have a much more nuanced view to mergers of equals,” Davis said.
Pinnacle, based in Nashville, and Columbus, Georgia-based Synovus operate branch networks throughout the Southeast, with market values of about $8 billion each.
Shares of Pinnacle slumped as much as 17% Friday, the biggest drop since the start of the pandemic in March 2020. They were down 12% to $91.49 at 11:11 a.m. in New York. Synovus fell 13% to $49.56.
Under terms of the transaction — the biggest bank deal to be announced so far this year — Synovus and Pinnacle shares will be converted into stock of a new Pinnacle parent company, according to a statement Thursday. Synovus shareholders will own about 48.5% while Pinnacle shareholders will have roughly 51.5%. The deal represents a premium of about 10% to Synovus shareholders.
Bloomberg News reported this week that Synovus was weighing options after drawing interest.
Economic and population growth in the Sun Belt has attracted large regional banks including PNC Financial Services Group Inc., Fifth Third Bancorp and Huntington Bancshares to open branches across the Southeast.
US regional banks are expected to speed up a long-awaited wave of consolidation, as the Trump administration takes a more friendly approach to deals. Regulators have reversed guidelines that would have added layers of scrutiny to the M&A review process. Banks have also been recovering from an industry crisis about two years ago, and are in better shape with more capital and liquidity to execute deals. This month, Huntington Bancshares Inc. struck a $1.9 billion deal for Veritex Holdings Inc. in Texas.
“I think people are trying to guess what was going to happen to Pinnacle and what was going to happen to Synovus and maybe this is not what they expected, which is why they’re reacting,” Harold Carpenter, Pinnacle’s chief financial officer, said on a call with analysts on Thursday discussing the proposed merger.
“What they haven’t reacted to this point is the power of the combined franchise,” Carpenter said.
The purchase is expected to be about 21% accretive to Pinnacle’s estimated operating earnings per share in 2027, according to the statement. The transaction is slated to be completed in the first quarter of 2026, subject to shareholder and regulator approval.
Synovus Chief Executive Officer Kevin Blair will become CEO of the combined entity. Terry Turner, who has been CEO of Pinnacle since its founding in 2000, will serve as the chairman. The combined entity will be operated under the Pinnacle brand.
“The merger creates a complementary footprint that fits together like puzzle pieces,” Blair said on the analyst call. “It expands across high-growth markets and positions us for sustained success. It also allows us to concentrate our resources in top-tier growth markets.”
Photo: A Pinnacle bank branch in downtown Nashville, Tennessee. (Liam Kennedy/Bloomberg)
Was this article valuable?
Here are more articles you may enjoy.
Renewal Rates in Q2 Tell of ‘Slowly Softening’ Commercial Lines Market, Says Ivans 
‘We’ll Have to See How This Plays Out,’ Says CEO Berkley on MGA Competitors 
Excessive Litigation Causes Surge in Liability Insurance Costs: Marsh McLennan CEO 
Florida Meteorologist Predicts Where the Next Hurricane Will Hit, For a Price 
