TD buying U.S.-based bank First Horizon for US$13.4-billion – The Globe and Mail

Toronto-Dominion Bank TD-T is acquiring U.S.-based bank First Horizon for US$13.4-billion in an all-cash deal, fulfilling a long-stated desire to bulk up in the southeastern United States.

First Horizon is based in Memphis, Tenn., and has about US$89-billion in assets with 412 branches across a dozen states. Its network adds to TD’s existing footprint in Florida and adds scale in Tennessee and Louisiana. First Horizon also has a presence in the Carolinas and Virginia and gives TD “footholds” in Georgia and Texas, TD said.

TD plans to use excess capital to fund the deal and will cancel a previously announced automatic share buyback plan. The bank has unusually high capital levels that put it in a position to make a large acquisition, and expects its common equity Tier 1 ratio to remain above 11 per cent at closing.

The deal would add about US$55-billion of loans and US$75-billion of deposits to TD’s balance sheet. When combined with TD’s U.S. subsidiary, TD Bank, the combined entity in the United States will have US$614-billion in assets, 10.7 million customers and 1,560 branches across 22 states.

After closing, the chief executive officer of First Horizon, Bryan Jordan, will join TD as a vice-chair and report to TD CEO Bharat Masrani, as well as joining TD’s U.S. board as chair.

“First Horizon is a great bank and a terrific strategic fit for TD. It provides TD with immediate presence and scale in highly attractive adjacent markets in the U.S. with significant opportunity for future growth across the Southeast,” Mr. Masrani said in a news release.

The transaction is expected to close in the first quarter of TD’s 2023 fiscal year, which starts in November, 2022. If the deal does not close by Nov. 27 this year, First Horizon shareholders would receive a premium.

TD Securities and JPMorgan Chase & Co. served as financial advisers to TD, while Morgan Stanley & Co. served as financial adviser to First Horizon.

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