DEFM14A: Pinnacle & Synovus Announce $8.6B Merger of Equals

Pinnacle Financial Partners and Synovus Financial Corp. will merge into a new entity, Newco, in an $8.6 billion all-stock transaction to create a leading financial institution in the Southeast.

Summary

• Pinnacle Financial Partners, Inc. (Pinnacle) and Synovus Financial Corp. (Synovus) will merge simultaneously into a newly formed Georgia corporation, Steel Newco Inc. (Newco), which will be named Pinnacle Financial Partners, Inc. as the surviving entity.
• The transaction is valued at $8.6 billion, based on the closing price of Synovus common stock on July 21, 2025, representing an approximate 10% premium to Synovus's unaffected per share value.
• Pinnacle common stock holders will receive one (1) share of Newco common stock for each Pinnacle share they own.
• Synovus common stock holders will receive 0.5237 shares of Newco common stock for each Synovus share they own, with cash in lieu of fractional shares.
• Following the merger, former Pinnacle shareholders are expected to own approximately 51.5% and former Synovus shareholders approximately 48.5% of Newco common stock.
• Pinnacle Bank will become a member bank of the Federal Reserve System, and Synovus Bank will merge into Pinnacle Bank, with Pinnacle Bank as the surviving bank.
• The mergers are intended to qualify as tax-free reorganizations for U.S. federal income tax purposes for common shareholders, except for cash received for fractional shares.
• Special virtual shareholder meetings for both companies are scheduled for November 6, 2025, at 9:00 a.m. Eastern Time, to approve the merger agreement and related proposals.
• Both boards of directors unanimously recommend that shareholders vote FOR the merger proposals.
• Anticipated merger and integration-related pre-tax costs are estimated at approximately $720 million, with the majority expected to be incurred at closing or within the first 15 months.
• Estimated gross pre-tax cost savings are approximately $282 million, or 11% of combined non-interest expense, with net cost savings of approximately $247 million (10% of combined non-interest expense) phased in 50% during 2026, 75% in 2027, and 100% thereafter.

Sentiment

Score: 7

Explanation: The merger presents a compelling strategic rationale for long-term growth and market leadership in the Southeast, with expected EPS accretion for Pinnacle shareholders. However, it acknowledges substantial integration costs, regulatory hurdles, and potential for dilution to tangible book value, which temper the overall positive outlook.

Positives

• The merger creates one of the largest financial services organizations in the Southeast, enhancing scale and market presence.
• The combined company is expected to leverage complementary and diversified revenue streams, leading to superior future earnings and prospects compared to standalone operations.
• The transaction is expected to be accretive to Pinnacle's 2026E and 2027E earnings per share.
• The Synovus exchange ratio represents a 10% premium to Synovus's unaffected share value, offering value to Synovus shareholders.
• The combined entity will adopt Pinnacle's high-growth business model, including its geographic structure, hiring philosophy, and compensation system, which has been a key contributor to Pinnacle's growth and shareholder returns.
• The transaction is generally expected to be tax-free for U.S. federal income tax purposes for common shareholders (excluding cash for fractional shares).
• Newco is committed to maintaining a significant employee and operational presence in Nashville, Tennessee, and Columbus, Georgia, for a minimum of five years.
• Newco will maintain significant community engagement in the Nashville and Columbus metro areas for a minimum of five years, not less than current levels.
• The boards believe the carefully balanced leadership and governance structure differentiates this merger from other recent 'merger of equals' transactions.

Negatives

• The fixed exchange ratio means the value of the merger consideration will fluctuate with the market price of Pinnacle common stock, introducing market risk.
• The integration process of the two companies may be more difficult, costly, or time-consuming than expected, potentially disrupting ongoing businesses.
• There is a risk that anticipated cost savings and synergies may not be fully realized or may take longer to achieve.
• The merger could result in the loss of key employees, impacting operations and customer relationships.
• The combined company will incur significant non-recurring transaction and integration costs, estimated at $720 million pre-tax.
• Newco will be subject to higher regulatory and supervisory standards as a Category IV bank holding company, potentially increasing compliance and operational costs.
• The merger is expected to be dilutive to Pinnacle's tangible book value per share and common equity Tier 1 ratio.
• Shareholders of both Pinnacle and Synovus will have a reduced ownership and voting interest in Newco after the merger.
• Neither Pinnacle nor Synovus shareholders will have dissenters' or appraisal rights in the merger.
• The merger agreement includes a $425 million termination fee, which could discourage potential competing acquirers.
• Newco's increased level of indebtedness post-merger could adversely affect its ability to raise additional capital and meet existing obligations.
• Holders of Newco common stock will be subject to the prior dividend and liquidation rights of the holders of Newco preferred stock.

Risks

• Deterioration in the financial condition of borrowers, including due to elevated interest rates, inflation, and challenging economic conditions, could lead to significant increases in loan losses.
• Fluctuations or differences in interest rates on loans or deposits from those modeled or anticipated, or changes affecting the yield curve, could negatively impact net interest margin.
• The impact of U.S. and global economic conditions and geopolitical instability could adversely affect the combined company.
• The sale of investment securities in a loss position before their value recovers, due to asset liability management strategies or liquidity needs.
• Adverse conditions in national or local economies, particularly in commercial and residential real estate markets.
• Inability to maintain the long-term historical growth rate of the combined bank's loan portfolio.
• Challenges in growing and retaining low-cost core deposits and retaining large, uninsured deposits, especially during periods of financial sector uncertainty.
• Changes in loan underwriting, credit review, or loss reserve policies due to economic conditions, examinations, or regulatory developments.
• Ineffectiveness of Newco's asset management activities in improving, resolving, or liquidating lower-quality assets.
• Increased competition from other financial institutions, leading to pricing pressures and negative impacts on net interest margin from elevated funding costs.
• Adverse results from regulatory examinations of Newco or the combined bank.
• Risks associated with expansion into new geographic or product markets.
• The risk that cost savings and synergies from the merger may not be fully realized or may take longer than anticipated.
• Disruption to Synovus's and Pinnacle's businesses due to the announcement and pendency of the merger.
• The integration of Pinnacle's and Synovus's businesses and operations may be materially delayed, more costly, or more difficult than expected.
• Failure to obtain the necessary approvals of the merger by the shareholders of Synovus or Pinnacle.
• The amount of costs, fees, expenses, and charges related to the merger may exceed expectations.
• Inability to obtain required governmental approvals on the expected timeline, or at all, or the imposition of adverse conditions by regulators.
• Reputational risk and the reaction of customers, suppliers, employees, or other business partners to the merger.
• Failure of closing conditions in the merger agreement to be satisfied, or unexpected delays or termination of the agreement.
• Dilution caused by the issuance of Newco common stock.
• The possibility that the merger may be more expensive to complete than anticipated.
• Risks related to management and oversight of the expanded business and operations of Newco.
• Newco may be subject to additional regulatory requirements as a large financial institution.
• The outcome of any legal or regulatory proceedings or governmental inquiries that may be pending or instituted against Synovus, Pinnacle, or Newco.
• General competitive, economic, political, and market conditions, including changes in asset quality, credit risk, interest rates, and capital markets.
• Any matter that would cause impairment of any asset, including goodwill or other intangible assets.
• Ineffectiveness of hedging strategies or unexpected counterparty/hedge failure.
• Reduced ability to attract and retain experienced financial services professionals or customers.
• Deterioration in the valuation of other real estate owned and increased associated expenses.
• Inability to comply with regulatory capital requirements, especially if commercial real estate loans exceed guideline levels.
• Vulnerability of banking systems to unauthorized access, cyberattacks, human error, or natural disasters.
• Increased compliance and operational costs due to increased regulatory oversight.
• Newco's ability to identify, consummate, and achieve synergies from potential future acquisitions.
• Difficulties and delays in integrating acquired businesses or realizing benefits from acquisitions.
• Risks associated with Pinnacle Bank's minority investment in Bankers Healthcare Group, LLC (BHG), including potential sale triggers.
• Changes in or interpretations of state and federal legislation, regulations, or policies applicable to financial service providers.
• Fluctuations in the valuations of Pinnacle's or Synovus's equity investments.
• Availability of and access to capital.

Future Outlook

The combined company expects to complete the merger in the first quarter of 2026, subject to obtaining all necessary shareholder and regulatory approvals. The transaction is anticipated to be accretive to Pinnacle's earnings per share for 2026 and 2027, despite an expected dilution to tangible book value per share and common equity Tier 1 ratio. The new entity aims to leverage its increased scale and adopt Pinnacle's high-growth business model to drive future growth and innovation in the Southeast market.

Management Comments

• We strongly support this combination of our companies and join our boards in their recommendations. (M. Terry Turner, President and CEO, Pinnacle; Kevin Blair, Chairman, CEO and President, Synovus)
• Mr. Turner believes Pinnacle's business model, including its geographic structure, hiring philosophy, and compensation system, has been a key contributor to its growth and shareholder returns.
• Mr. Blair emphasized factors distinguishing this combination from other merger of equals transactions, including clear and continuous leadership from day one, the need for early difficult decisions on operating model and talent, cultural fit, and taking the best of both institutions.
• Mr. Blair confirmed to the Pinnacle board his intention to maintain the Pinnacle business model for the combined company.

Industry Context

The financial services industry is experiencing increasing competitive pressures, with advantages of scale becoming more pronounced due to advancements in technology, delivery channels, and product offerings. National and super-regional banks are making significant investments in the Southeast, intensifying competition for deposits and talent. The regulatory environment for bank consolidations, particularly for institutions crossing the $100 billion asset threshold, is also a significant factor, with recent Federal Reserve Board reports indicating that many large financial institutions are presumptively ineligible for acquisitions.

Comparison to Industry Standards

• Pinnacle Bank is recognized as the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, based on June 30, 2024, FDIC deposit data.
• Pinnacle was ranked No. 11 on FORTUNE magazine's 2024 list of 100 Best Companies to Work For in the U.S., marking its eighth consecutive appearance.
• Pinnacle was also recognized as the No. 3 company to work for in the U.S. for financial services and insurance, No. 8 for women, No. 9 for millennials, and No. 21 for parents in 2024.
• Pinnacle is listed as No. 5 on American Banker's 2024 list of America's Best Banks to Work For and No. 1 among banks with more than $10 billion, its 12th consecutive appearance.
• Synovus Bank operates in some of the highest growth markets in the Southeast.
• The Federal Reserve Board reported in May and November 2024 that approximately two-thirds of U.S. large financial institutions (LFIs) had examination ratings that made them presumptively ineligible for acquisitions, and a recent proposal to modify the LFI ratings regime would not significantly increase eligible institutions.
• The boards of both companies believe this combination has the potential to create more long-term value for shareholders compared to other strategic alternatives, citing the leadership, governance, cultural alignment, and strategic plan as differentiating factors from other recent large merger of equals transactions.

Management Changes

Corporate Governance

Legal Proceedings

• No pending or threatened lawsuits relating to the transactions contemplated by the merger agreement are currently known by Newco, Synovus, or Pinnacle.
• Demand letters have been received from purported shareholders of Synovus and Pinnacle alleging deficiencies and/or omissions of allegedly material information in the Form S-4 registration statement.
• Synovus and Pinnacle believe that the allegations in these demand letters are without merit.
• There can be no assurances that additional complaints or demands will not be filed or made with respect to the merger in the future.

Related Party Transactions

• No transactions or series of related transactions, agreements, arrangements, or understandings between Synovus or its subsidiaries, on the one hand, and any current or former director or executive officer or 5%+ beneficial owner, on the other hand, of the type required to be reported in SEC filings (Item 404 of Regulation S-K), except as disclosed in Synovus Reports.
• No outstanding loans made by Synovus or its subsidiaries to any executive officer or other insider (as defined in Regulation O), other than loans that comply with or are exempt from Regulation O.
• No transactions or series of related transactions, agreements, arrangements, or understandings between Pinnacle or its subsidiaries, on the one hand, and any current or former director or executive officer or 5%+ beneficial owner, on the other hand, of the type required to be reported in SEC filings (Item 404 of Regulation S-K), except as disclosed in Pinnacle Reports.
• No outstanding loans made by Pinnacle or its subsidiaries to any executive officer or other insider (as defined in Regulation O), other than loans that comply with or are exempt from Regulation O.

Stakeholder Impact

• Shareholders: Will become shareholders of Newco, receiving a fixed exchange ratio of Newco common stock for their existing shares. Their ownership and voting interest in Newco will be reduced compared to their individual company holdings. They will not have dissenters' or appraisal rights. The value of their consideration will fluctuate with Newco's stock price.
• Employees: Continuing employees will receive base salary, annual bonus, and long-term incentive opportunities no less favorable in aggregate for one year post-merger. Employee benefits (excluding severance/retention) will also be no less favorable in aggregate for one year. Severance benefits are provided for certain terminated employees for two years post-merger. Retention programs are planned for employees.
• Customers: The merger aims to create a larger, more competitive financial institution, potentially leading to enhanced products, services, and technology offerings.
• Communities: Newco has committed to maintaining a significant employee and operational presence, as well as community engagement, in Nashville, Tennessee, and Columbus, Georgia, for a minimum of five years.
• Creditors: Newco will assume the outstanding debt obligations and preferred stock of both Pinnacle and Synovus. The combined entity's level of indebtedness could impact its ability to raise additional capital and meet its obligations.

Next Steps

• Pinnacle and Synovus shareholders will hold virtual special meetings on November 6, 2025, to vote on the merger agreement and related proposals.
• Newco must obtain all necessary regulatory approvals from the Federal Reserve Board, the Tennessee Department of Financial Institutions (TDFI), and the Georgia Department of Banking and Finance (GDBF).
• The merger is expected to be completed in the first quarter of 2026, following shareholder and regulatory approvals.
• Pinnacle Bank will become a member bank of the Federal Reserve System immediately after the merger, followed by the merger of Synovus Bank into Pinnacle Bank.
• The combined company will proceed with the integration of Pinnacle and Synovus businesses and operations.
• Newco will transition to comply with higher regulatory and supervisory standards applicable to Category IV bank holding companies.
• M. Terry Turner will serve as Non-Executive Chairman of Newco's boards for two years, then as a special advisor to the CEO for two years.
• Kevin S. Blair will serve as President and Chief Executive Officer of Newco and Pinnacle Bank, and will succeed Mr. Turner as Chairman after two years.
• Robert A. McCabe, Jr. will serve as Vice Chairman of Newco's boards and Chief Banking Officer for one year, then as a consultant for three years.
• Charissa D. Sumerlin will serve as Chief Credit Officer of Newco.
• Zack Bishop will serve as Chief Operating Officer of Newco.
• Shellie R. Creson will serve as Chief Risk Officer of Newco.
• Allan E. Kamensky will serve as Chief Legal Officer of Newco.
• Elizabeth D. Wolverton will serve as Chief Digital and Product Solutions Officer of Newco.
• Andrew J. Gregory, Jr. will serve as Chief Financial Officer of Newco and Pinnacle Bank.
• Tim E. Bentsen will serve as Lead Independent Director of Newco's boards for the duration of the transition period.
• G. Kennedy Thompson will serve as a director of Newco's boards until the first anniversary of the Effective Time (extendable).

Key Dates

Recommendation

The merger of Pinnacle and Synovus into Newco presents a strategically sound move to enhance scale and market position in the competitive Southeast banking sector, with expected EPS accretion for Pinnacle shareholders. However, the transaction involves substantial integration costs, potential for tangible book value dilution, and inherent risks associated with combining two large entities and navigating increased regulatory scrutiny as a Category IV bank. The fixed exchange ratio also exposes shareholders to market fluctuations until the closing. Given the balance of significant long-term strategic benefits against the near-term execution risks and financial impacts, a 'Hold' recommendation is appropriate, advising investors to monitor the integration process and market conditions closely.

Keywords

Financial Merger, Bank Acquisition, SEC Filing, Corporate Governance, Risk Management, Strategic Analysis, Pinnacle Financial Partners, Synovus Financial Corp, Newco, Banking Industry, Shareholder Vote, Regulatory Approval, Financial Services, Merger of Equals, Stock Exchange