Truist Financial is taking preemptive action, anticipating the arrival of an activist investor, although no such investor has come forward as of yet.
According to reports, the bank (ticker: TFC) plans to sell its remaining 80% stake in an insurance-brokerage business to private-equity firm Stone Point Capital for a staggering $10 billion. Stone Point had previously acquired a 20% stake in the insurance business back in February for $1.95 billion.
This rumored sale follows closely on the heels of Truist’s recent board restructuring, which was disclosed in a filing just last week. Eight of Truist’s directors will be stepping down by the end of the year – four due to mandatory retirement age and the others moving on for other reasons. This move will bring the board size down to 13 directors, with 12 of them being independent, as opposed to the previous count of 21.
Truist has chosen not to comment on these recent developments.
Truist was formed through the merger of SunTrust Bank and BB&T in 2019. Despite initial promises of synergies, the post-merger bank has fallen short of estimates in 11 out of the past 20 quarters.
Due to the potential for a turnaround, Truist became a popular choice among Wall Street bulls last month. It was also a stock pick recommended by (publication name). Wells Fargo Securities analyst Mike Mayo has given Truist stock an Overweight rating and believes the company is “primed for an activist.” While no activist investor has emerged yet, recent changes within Truist have given Mayo reason for optimism.
Mayo stated this week, “It is up to Truist to take strong restructuring moves or risk changes to management in the near term or greater intervention in the long term. It seems that Truist is now more attuned to investor concerns.”
Truist will be reporting its third-quarter results on October 19.