TD Bank Group in Toronto has agreed to buy First Horizon in Memphis, Tenn.
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.
“First Horizon is a great bank and a terrific strategic fit for TD,” Bharat Masrani, TD’s group president and CEO, said in the release.
“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.
Leo Salom, group head of U.S. retail for TD Bank Group and president and CEO of TD Bank will lead the combined businesses.
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. TD Securities, J.P. Morgan, Simpson Thacher & Bartlett and Torys advised TD. Morgan Stanley and Sullivan and Cromwell advised First Horizon.