TD to buy First Horizon in $13.4b US expansion

Bloomberg

Toronto-Dominion Bank agreed to buy First Horizon Corp for $13.4 billion, putting its massive capital stockpile to use for its largest deal ever and expanding its presence in the US Southeast.
The Canadian bank will pay $25 a share in cash for Memphis, Tennessee-based First Horizon, according to a statement Monday. The purchase price is about 37% higher than First Horizon’s closing price Friday.
The deal would be Toronto-Dominion’s largest acquisition ever and Chief Executive Officer Bharat Masrani’s boldest move since taking the reins in 2014. The transaction also would continue the Toronto-based bank’s pattern of growing in the US through acquisitions, with its home country offering limited growth prospects.
The purchase “provides TD with immediate presence and scale in highly attractive adjacent markets in the US with significant opportunity for future growth across the Southeast,” Masrani said in the statement, calling First Horizon “a terrific strategic fit” for his company.
First Horizon has 412 branches and more than 1.1 million individual and business customers across 12 states. It has leading positions in Tennessee and Louisiana; a presence in Florida, the Carolinas and Virginia; and “important footholds” in Atlanta, Dallas and Houston, Toronto-Dominion said.
That would move Toronto-Dominion beyond its current US East Coast footprint and make its US franchise into one of the nation’s top six banks, with about $614 billion in assets, the bank said. Bryan Jordan, First Horizon’s CEO, will join Toronto-Dominion as vice chair, reporting to Masrani.
The deal also helps Toronto-Dominion put to work a large stockpile of capital that it had built up after Canadian regulators prevented the nation’s banks from buying back stock or boosting dividends during the early portion of the pandemic. The lender has about C$21.6 billion in excess Common Equity Tier 1 capital. Toronto-Dominion announced separately on Monday that it’s terminating an automatic share purchase plan under 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 entered US consumer banking with the $3.8 billion purchase of 51% of Banknorth Group Inc. in 2004, which gave it almost 400 branches in six states in the US Northeast.