BB&T to buy Susquehanna in rare large U.S. post-crisis bank deal

(Reuters) - Bank holding company BB&T Corp said it would buy Susquehanna Bancshares Inc in a cash-and-stock transaction valued at $2.5 billion in one of the biggest U.S. banking deals since the 2008 financial crisis.

Banking deals of over $1 billion have been rare since the crisis amid concerns that some banks have become too big to fail as well as too complex, posing a threat to taxpayers and the banking system.

M&T Bank Corp's planned $3.7 billion purchase of Hudson City Bancorp Inc , announced in August 2012, is yet to close after the Federal Reserve raised concerns about M&T's anti-money laundering procedures.

BB&T said the deal would not reduce its capital levels - a major concern of regulators when considering bank mergers.

Winston-Salem, North Carolina-based BB&T operates in 12 south-eastern U.S. states and in Washington D.C.

Susquehanna, which is based in Lititz, Pennsylvania, has branches in Pennsylvania, Maryland, New Jersey and West Virginia.

Shares of Susquehanna, which had a market value of about $1.8 billion as of Oct. 31, were up 33 percent at $33.17 in early trading. BB&T shares were down 2.1 percent at $37.47.

BB&T has been on an acquisition spree, and agreed to buy 41 branches in Texas from Citigroup Inc in September. It had also agreed to buy Kentucky Financial Corp for $363 million.

Large and wealthy markets like Pennsylvania grow a bit slower, but don't have the boom-bust cycle of many other markets, BB&T Chief Executive Kelly King said on a call.

BB&T said the deal, which is expected to close in the third quarter of 2015, will add to its earnings in the first full year after its completion.

Susquehanna shareholders will receive 0.253 shares of BB&T and $4.05 in cash for each share held, valuing the deal at $13.74 per share based on BB&T's closing price on Tuesday.

Deutsche Bank Securities and Wachtell, Lipton, Rosen & Katz advised BB&T, while Keefe, Bruyette & Woods and Sullivan & Cromwell LLP advised Susquehanna.

(Editing by Saumyadeb Chakrabarty and Maju Samuel)