TD Bank deal to acquire First Horizon has been called off

Both parties mutually agreed to end the agreement, with TD citing issues gaining regulatory approvals

Toronto-based TD Bank Group and Memphis, Tenn.-based First Horizon Corporation, one of the country’s largest warehouse lenders, have agreed to terminate an acquisition deal, according to a joint announcement issued Thursday.

The deal, first announced in early 2022 and valued at $13.4 billion, would have led to TD Bank acquiring First Horizon, facilitating TD Bank’s broader entry into the U.S. market. However, the deal was ultimately called off due to uncertainty regarding the timetable for regulatory approval, according to reports and statements from the companies.

“TD informed First Horizon that TD does not have a timetable for regulatory approvals to be obtained for reasons unrelated to First Horizon,” the announcement said. “Because there is uncertainty as to when and if these regulatory approvals can be obtained, the parties mutually agreed to terminate the merger agreement.”

A spokesperson for TD told Reuters that the termination was solely due to TD’s inability to establish a timetable for the regulatory approvals, and was unrelated to anything on First Horizon’s end. The spokesperson denied any relationship between the termination of the deal and the recent banking turmoil that stems from the collapses of Silicon Valley Bank and First Republic Bank.

“Though disappointed with the outcome, we move forward with a strong, growing franchise in the United States, servicing more than 10 million customers across our footprint.” said Bharat Masrani, group president and CEO of TD Bank Group in a statement. “I want to thank First Horizon for their partnership over the last several months and wish them enormous success for the future.”

TD Bank Group is one of the “Big Five” banks of Canada with dominance in the Canadian financial system, while First Horizon is the third-largest warehouse lender in the United States. The deal was a culmination of TD’s hunt for U.S.-based companies to acquire after other deals fell through.

Under the terms of the termination agreement, TD will make a $200 million cash payment to First Horizon, in addition to a $25 million fee reimbursement due to First Horizon under the terms of the merger deal.

“While today’s announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability,” said First Horizon chairman, president and CEO Bryan Jordan. “Our strong capital position, disciplined credit quality, expense control measures, and well-diversified and stable funding mix have enabled our business to navigate challenging banking industry dynamics and remain focused on executing our client-centric growth plan.”

Prior to the collapse of the deal, both companies publicly reaffirmed their commitment to closing the transaction, having extended the closure from from February 27 to May 27, 2023.

On Thursday, shares of First Horizon dropped over 30% in late-day trading and have dropped over 45% compared to the previous five-day period.

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