Toronto-Dominion Bank agreed to buy First Horizon Corp. for US$13.4 billion, using its massive capital reserves to fund its largest-ever deal ever and the U.S. Expanded its presence in the Southeast.
According to a statement on Monday, the Canadian bank will pay US$25 per share in cash to Memphis, Tennessee-based First Horizon. The purchase price is about 37 percent higher than First Horizon's closing price on Friday.
The deal will be Toronto-Dominion's largest acquisition to date and the boldest move by Chief Executive Officer Bharat Masrani since taking over in 2014. The transaction will also continue the growth pattern in the US through the acquisition of the Toronto-based bank, with its home country offering. Limited growth potential.
Masrani said in the statement, the purchase "gives TD significant opportunities for future growth in the Southeast in highly attractive adjacent markets in the U.S. with immediate presence and scale," calling First Horizon "a terrific strategic fit" for his company. By saying
First Horizon has 412 branches in 12 states and over 1.1 million personal and business customers. It has leading positions in Tennessee and Louisiana; presence in Florida, the Carolinas and Virginia; And "significant foothills" in Atlanta, Dallas and Houston, Toronto-Dominion said.
The bank said it would move Toronto-Dominion beyond its current US East Coast footprint and make the US franchise one of the top six banks in the country, with assets of about US$614 billion. Brian Jordan, CEO of First Horizon, will join Toronto-Dominion as Vice Chair, reporting to Masrani.
The deal helps Toronto-Dominion work out a sizable stockpile of capital that was created after Canadian regulators prevented the country's banks from buying back stock or raising dividends during the early part of the pandemic. The lender has approximately $21.6 billion in common equity Tier 1 capital. Toronto-Dominion announced separately on Monday that it was ending an automatic share purchase plan as part of its buyback plan.
Looking south
With bank mergers in Canada's highly concentrated banking sector blocked by regulators, Toronto-Dominion has long looked south for expansion. The firm acquired Banknorth Group Inc. in 2004. With a US$3.8 billion purchase of 51 percent of the U.S. Entered consumer banking, which made it the U.S. Gave about 400 shakhas in six states in the Northeast.
Three years later, Toronto-Dominion expanded its U.S. business with the US$8.34 billion acquisition of Commerce Bancorp Inc. Attendance doubled, adding about 460 locations. At the time of the commerce deal, Masrani was the US President of the Toronto-Dominion. was the head of the division, which took advantage of a strong Canadian dollar and turmoil on target that included the U.S. dollar. Investigations were involved that led to the ouster of its founder.
Even before the planned First Horizon acquisition, Toronto-Dominion already had a U.S. had more branches than its domestic market.
The first Horizon deal is expected to close in the first quarter of Toronto-Dominion's fiscal 2023, which begins in November. If the transaction is not completed before November 27, First Horizon shareholders will receive an additional 65 cents per share on an annualized basis for the period from the date immediately prior to the closing date. And if this is not done by February 27, 2023, the deal will expire without extension.