First Horizon and TD Bank have mutually agreed to call off a planned $13 billion merger that would have formed the country’s sixth-largest bank. The deal was valued at $13.4 billion, or $25 per common share of First Horizon. TD will pay First Horizon a $200 million breakup fee plus $25 million in reimbursement fees. The banks said in a release that the agreement was dissolved after TD informed First Horizon that it did not have a timetable for receiving regulatory approvals for the merger and was uncertain if and when they could be obtained. TD said the reasons for the uncertainty were unrelated to First Horizon.
The decision to end the agreement provides “clarity” to colleagues and shareholders, said Bharat Masrani, the president and CEO of TD Bank Group. The deal, which would have been TD’s biggest, had faced months of regulatory uncertainty and recently came under pressure from TD’s investors after the U.S. regional banking crisis. The U.S. regional banking industry has been on shaky ground in the last two months, which saw three banks collapse after a flight of deposits spiraled out of control.
First Horizon’s share price has plunged about 40% over the past couple of months, falling well below the $25 per share that TD offered when the takeover was announced in February 2022. Other regional bank stocks have tumbled in recent days after First Republic’s failure. Investors are waiting for the next shoe to drop. Early Thursday, California-based PacWest Bank also announced that it was calling off its $1.5 billion merger with First Republic.TD and First Horizon mutually decided to end the deal because there was no clarity on when they would get regulatory approvals, the two banks said in a statement. The deal had faced months of regulatory uncertainty and recently came under pressure from TD’s investors after the U.S. regional banking crisis. TD first agreed to buy First Horizon in February last year to expand its presence in the United States. Since then, the U.S. regional banking industry has been on shaky ground, with three banks collapsing after a flight of deposits spiraled out of control.
The collapse of the deal is a blow to TD’s ambitions to expand its presence in the United States. The bank has been looking to grow its U.S. business for years, and the acquisition of First Horizon would have been a significant step in that direction. However, the regulatory hurdles proved too high, and the bank was unable to secure the necessary approvals to complete the deal.
The collapse of the deal is also a blow to First Horizon, which has been struggling to stay afloat in the face of the regional banking crisis. The bank’s share price has been under pressure for months, and the collapse of the deal is likely to add to the bank’s woes. However, the bank will receive a $200 million breakup fee plus $25 million in reimbursement fees, which will help to cushion the blow.
In conclusion, the collapse of the deal between First Horizon and TD Bank is a significant blow to both banks. The deal would have created the country’s sixth-largest bank, but regulatory hurdles proved too high, and the banks were unable to secure the necessary approvals to complete the deal. The collapse of the deal is also a blow to TD’s ambitions to expand its presence in the United States and to First Horizon, which has been struggling to stay afloat in the face of the regional banking crisis.
