The
$525 billion-asset TD said in a press release Monday that it will pay $13.4
billion in cash for the $89 billion-asset First Horizon. The deal, which is expected to
close this fall, priced First Horizon at
210% of its tangible book value.
“It provides TD with immediate presence and scale
in highly attractive adjacent markets in the U.S. with significant opportunity
for future growth" in the Southeast, he added.
Bryan Jordan, First Horizon’s president
and CEO, will become vice chairman of TD Bank Group.
First Horizon has $55 billion of loans
and $75 billion of deposits.
TD Bank said it does not plan to close any branches. It will also commit $40 million to First Horizon's current charitable program.
The transaction is expected to be immediately accretive to TD's earnings per share and 10% accretive in 2023.
TD said it expects to cut a third of First Horizon's annual noninterest expenses, or $610 million. The company expects to incur $1.3 billion of merger-related expenses.
If the transaction does not close before
Nov. 27, First Horizon shareholders will receive an additional 65 cents per
share on an annualized basis for the period from Nov. 27 through the day
immediately prior to the closing.
First Horizon bought Iberiabank in Lafayette, La., in July 2020 for $3.9 billion.
"In our view, First Horizon's inability to capitalize on selling new products to existing customers ultimately may have triggered its status as a public company," Christopher Marinac, an analyst at Janney Montgomery Scott, said in a note to clients.
"Kudos to management and the board for taking action to secure an alternate cash buyout," Marinac added.
The transaction will terminate, unless
otherwise extended, if it does not close by Feb. 27, 2023.
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