Synovus Financial stock falls after merger announcement with Pinnacle

Investing.com -- Synovus Financial Corp. (NYSE: SNV) stock fell 9% in pre-market trading Friday after the company announced an all-stock merger with Pinnacle Financial Partners (NASDAQ: PNFP) valued at $8.6 billion.

The deal, which will create a combined entity operating under the Pinnacle Financial Partners name, offers Synovus shareholders a 10% premium based on unaffected share prices. Under the terms, Synovus shareholders will receive 0.5237 shares of a new Pinnacle parent company for each Synovus share, representing a per-share value of $61.18.

Citi analyst Benjamin Gerlinger attributed the share price compression to "market speculation leading into the merger announcement and an elevated operational hurdle for PNPF’s long-term market share capture strategy." However, he noted the downside "should be short lived as the pro forma franchise retains the operational wherewithal of legacy PNFP while adding a stable core deposit franchise via SNV."

The combined company will be led by Synovus CEO Kevin Blair as President and CEO, while Pinnacle CEO Terry Turner will serve as Chairman. Following the transaction, Synovus shareholders will own approximately 48.5% of the combined entity, with Pinnacle shareholders holding the remaining 51.5%.

Evercore ISI analyst John Pancari commented that "momentum is clearly building in regional bank M&A," but noted the 10% premium "could surprise to the downside given the bank’s attractive footprint, strong market share, and favorable growth dynamics."

The transaction is expected to be approximately 21% accretive to Pinnacle’s estimated operating EPS in 2027, with a tangible book value per share earnback period of 2.6 years.

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