The Kelly King muster test for acquisitions is a minimum 15% internal rate of return. The acquisition cost is $570 million. 15% of $570 million is $85 million. Say cost of debt is 3% or $17 million on the $570 million. Eps is therefore, up a dime. I would assume a nickel for the first year 2012. There are benefits to bbt outside their insurance segment - really helps their wealth business segment.
I think this is another nice deal for bbt - colonial, bbx and now crump. If they could get sti at the right price it would be tremendous for shareholders but bad for employees. Don't think bbt has the stomach for this. Character and Judgement are their core values. People matter. They'll still get the quantum jump in earnings driven by a sharp reduction in credit costs, loan growth, increased wealth business and "small" acquisitions.
BB&T on Friday agreed to purchase the life and P&C insurance operating divisions of Roseland, N.J.-based Crump Group from J.C. Flowers for $570 million in cash, saying the deal would "add approximately $300 million in annual revenue."
The analyst estimates that the company will earn $2.80 a share in 2012, followed by EPS of $3.15 in 2013