Unable to get clarity on if and when they would get regulatory approvals TD Bank and First Horizon call off US$13.4-billion merger deal.
There are many times we engage in different business endeavours that ought to benefit us, but in the long run meet with stiff regulations that force such endeavours to pack up before it even begin.
Such is the situation of Toronto-Dominion Bank (TD Bank) which wants to call off the merger deal with First Horizon Corporation over failure to secure approval from its regulators.
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With this singular move which was announced on May 4, TD Bank may very well be on its way to losing $225 million to First Horizon Corp.
According to TD bank, we called off the deal because there is clarity on if and when we would get the necessary regulatory approvals.
TD bank will pay US$200 million to First Horizon, as part of the termination agreement and a US$25 million reimbursement fee.
The merger deal would have been concluded by May 27, if both parties had been able to secure the blessing of the regulatory body and would then become the sixth-largest bank in the U.S. by assets.
Signs Of Problem
Trouble began this February when TD bank warned First Horizon that it might not be able to secure the blessing of regulators by the extended deadline of May 27.
The deal hit another snag after the collapse of Silicon Valley Bank sent shockwaves through the US banking system, in which TD bank already had a significant footprint, including a 12% stake in The Charles Schwab Corp.
Also the U.S. banking turmoil raised doubts that the deal would go ahead at its original US$25 per share offer.
Furthermore, First Horizon’s stock price fell more than 30% between the announcement of the deal and late March.
The Memphis-based bank’s stock plunged again on May 4, with shares down more than 35% to US$9.50 in late morning trading in New York.
In the face of all the afore mentioned challenges, TD bank had remained committed to buying First Horizon, a decision laid bare at TD bank’s annual shareholder meeting on April 20,
Commenting on this, TD bank chief executive Bharat Masrani said: “We see the benefits of the merger”.
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Merger Deal Collapses
However, the bank could not progress with the merger deal because it was not sure of when the regulatory body would approve deal.
Masrani said: “Though disappointed with the outcome, we move forward with a strong, growing franchise in the United States, servicing more than ten million customers across our footprint”.
First Horizon chief executive Bryan Jordan said the announcement was “unfortunate and unexpected,” but that his bank would “continue on its growth path operating from a position of strength and stability”.