Toronto Dominion Bank Cancels US Bank Merger Deal

The Toronto Dominion Bank (TD) has made a significant move by canceling its US bank merger deal. This decision has sent shockwaves through the financial industry.

The merger deal was announced in 2020, but it was met with opposition from regulatory bodies, including the US Federal Reserve and the Office of the Comptroller of the Currency.

The deal was valued at around $21 billion, and would have seen TD acquire 88% of the US bank's shares. However, the regulatory hurdles were too great, and the deal was ultimately scrapped.

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The TD Bank mergers and acquisitions story is a significant one. The Toronto Dominion Bank's takeover of Canada Trust is a notable example.

The deal was worth $8 billion and was first announced in early August. The takeover was approved by Finance Minister Paul Martin, but with certain conditions.

One of those conditions is that the new bank, TD Canada Trust, must sell Canada Trust's MasterCard business. This is because Visa and MasterCard rules in Canada prohibit a single financial institution from selling both brands.

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The sale of Canada Trust's MasterCard business is expected to attract bids from Bank of Montreal, National Bank, and even some US giants like MBNA. A buyer has already been sought.

The deal will close on Tuesday, marking a significant milestone for the TD Bank. This date coincidentally marks the 45th anniversary of the merger between The Bank of Toronto and The Dominion Bank that formed the TD.

The Canadian Federation of Independent Business is disappointed with the takeover approval, citing concerns about consumer choice and the potential for more bank mergers to be done behind closed doors.

TD Bank Group has called off its $13.4-billion US deal to acquire U.S. bank First Horizon Corp., citing regulatory uncertainty around the takeover.

The decision provides clarity for TD colleagues and shareholders, according to CEO Bharat Masrani.

TD had said earlier this year that it did not expect to receive regulatory approval for the First Horizon deal by a May 27 deadline, but it was in talks to extend the closing date.

The bank will pay First Horizon a $200-million US break fee in addition to a $25-million US fee reimbursement owed to First Horizon under the merger agreement.

Under the terms of the agreement, the First Horizon preferred shares purchased by TD Bank will continue to reflect a conversion price of $25 US per share.

The cancellation of the deal comes amid upheaval in the U.S. banking sector, with the collapse of Silicon Valley Bank and Signature Bank earlier this year putting pressure on the U.S. banking sector.

The deal was first announced in February 2022 and would have been TD's largest deal ever, expanding its presence in the US Southeast and giving it more than 400 new branches in the country.

TD will continue to service its 10 million customers across the US, but the deal's collapse marks a reversal of the bank's push into the US market.

The KBW Regional Banking Index has fallen more than a third since the deal was first agreed, and shares in First Horizon almost halved on the news in early trading.