Canada's second largest lender Toronto-Dominion Bank Group will buy First Horizon Corp in an all-cash deal for $13.4 billion to expand its footprint in the United States, the banks said on Monday.
Canadian lenders have accelerated their move into the U.S. recently helped by billions of dollars in excess capital where the opportunity for growth remains greater due to the fragmented banking market.
There has also been a steady stream of tie-ups among midsized U.S. lenders in the last two years, as institutions seek increased scale to better compete against the country's largest banks.
TD said on Monday the acquisition will allow it to utilize First Horizon's commercial and specialty banking capabilities in the southeastern U.S. market and it will continue to make investments to ramp up its commercial banking offerings.
The deal will help its U.S. franchise emerge among the top six U.S. banks, with about $614 billion in assets and a network of 1,560 stores, serving over 10.7 million U.S. customers across 22 states, TD Bank said.
The offer of $25 per share represents a premium of nearly 37% to First Horizon's last close. Shares of First Horizon were up nearly 32% in premarket trading.
TD said it expects to incur total merger and integration costs of $1.3 billion primarily in the first two years following close.
After the deal closes, which is expected in the first quarter of TD's 2023 fiscal year, Bryan Jordan, president and chief executive officer of First Horizon, will join TD as vice chair, TD Bank Group.
(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila)
