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TD Bank group may not be able to buy First Horizon at agreed price

First Horizon Co., Ltd. (United States: FHN) It closed at $21.29 on March 7th. As of Wednesday, it is down 26% as the banking sector collapses. Silicon Valley Bank (United States: SIVB) To Credit Suisse Bank (United States: CS).

So if you Toronto-Dominion Bank (CA: TD) CEO Bharat Masrani, must work to pull your bank out of the deal to acquire First Horizon. $13.4 billionor US$25 per share.

If TD had to close the deal tomorrow, it would pay 59% more than the Memphis, Tennessee-based bank’s current share price. That won’t go very well for shareholders.

So the question is whether TD will scrap the acquisition altogether or renegotiate the purchase price at a significantly lower price.

Given all the uncertainty in the North American banking industry, there are real downsides to executing trades, even at lower prices.

before bleeding

BNN Bloomberg reported on March 13 that First Horizon is bleeding deposits, down 10% over the past two quarters and losing deposits at a rate worse than the industry average. I quoted CIBC analyst Paul Holden for that tidbit.

And that was before the SVB meltdown.

TD First announced This comes after First Horizon’s fiscal 2021 (end of December) showed it had $75 billion in deposits and a $55 billion loan portfolio.Adding this business to the balance sheet gives TD Sixth largest bank in the United States Give the rest of the Big Five great bragging rights.

Who knows where First Horizon’s deposit balance will go after all is said and done. But TD doesn’t have time.

“As the May Walk date looms and bank stocks crash, the question is whether TD walks away or calls for a big rate cut,” BNN Bloomberg reported in a comment from Cabot Henderson. Henderson specializes in merger arbitrage and special situations at JonesTrading.

In February, both parties Extended walk schedule From February 27th to May 27th. He is 10 weeks away from the May deadline. It’s less than 3 months. February may have been a big smile for both companies. Unfortunately, not today.

Not only has the banking landscape changed dramatically since February, but the regulatory issues that have plagued First Horizon’s partnership from the start have persisted.

potential lemon

On March 8, around the same time the SVB collapsed, S&P Global Market Intelligence reported that the two parties were back at the negotiating table. First Horizon said in a 10-K filing that TD does not expect to receive regulatory approval before May 27, according to the report.

Of the $2 billion+ bank transactions announced between January 1, 2020 and June 30, 2022, the median number of days from announcement to closing was 326. S&P Global Report indicates that the TD and first horizon were over 370 days on March 8th.

According to Compass Point analyst Ed Groshans, the merger could be extended two more times to August 27 and November 27, very close to Christmas.

The longer this transaction takes to complete, the higher the risk of TD buying potential lemons. Unless First Horizon shareholders agree to a significant price cut in their stock, the deal is unlikely to go through, no matter how much they agree to extend.

TD shareholders are probably pretty nervous at this point. If banks were smart, they would stay out of the deal and formulate a different strategy for U.S. growth.

This story was originally Fintel.

The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

Summarize this content to 100 words

First Horizon Co., Ltd. (United States: FHN) It closed at $21.29 on March 7th. As of Wednesday, it is down 26% as the banking sector collapses. Silicon Valley Bank (United States: SIVB) To Credit Suisse Bank (United States: CS). So if you Toronto-Dominion Bank (CA: TD) CEO Bharat Masrani, must work to pull your bank out of the deal to acquire First Horizon. $13.4 billionor US$25 per share.If TD had to close the deal tomorrow, it would pay 59% more than the Memphis, Tennessee-based bank’s current share price. That won’t go very well for shareholders. So the question is whether TD will scrap the acquisition altogether or renegotiate the purchase price at a significantly lower price.

Given all the uncertainty in the North American banking industry, there are real downsides to executing trades, even at lower prices.before bleeding BNN Bloomberg reported on March 13 that First Horizon is bleeding deposits, down 10% over the past two quarters and losing deposits at a rate worse than the industry average. I quoted CIBC analyst Paul Holden for that tidbit. And that was before the SVB meltdown. TD First announced This comes after First Horizon’s fiscal 2021 (end of December) showed it had $75 billion in deposits and a $55 billion loan portfolio.Adding this business to the balance sheet gives TD Sixth largest bank in the United States Give the rest of the Big Five great bragging rights. Who knows where First Horizon’s deposit balance will go after all is said and done. But TD doesn’t have time. “As the May Walk date looms and bank stocks crash, the question is whether TD walks away or calls for a big rate cut,” BNN Bloomberg reported in a comment from Cabot Henderson. Henderson specializes in merger arbitrage and special situations at JonesTrading.In February, both parties Extended walk schedule From February 27th to May 27th. He is 10 weeks away from the May deadline. It’s less than 3 months. February may have been a big smile for both companies. Unfortunately, not today.

Not only has the banking landscape changed dramatically since February, but the regulatory issues that have plagued First Horizon’s partnership from the start have persisted.potential lemonOn March 8, around the same time the SVB collapsed, S&P Global Market Intelligence reported that the two parties were back at the negotiating table. First Horizon said in a 10-K filing that TD does not expect to receive regulatory approval before May 27, according to the report.Of the $2 billion+ bank transactions announced between January 1, 2020 and June 30, 2022, the median number of days from announcement to closing was 326. S&P Global Report indicates that the TD and first horizon were over 370 days on March 8th.According to Compass Point analyst Ed Groshans, the merger could be extended two more times to August 27 and November 27, very close to Christmas. The longer this transaction takes to complete, the higher the risk of TD buying potential lemons. Unless First Horizon shareholders agree to a significant price cut in their stock, the deal is unlikely to go through, no matter how much they agree to extend.TD shareholders are probably pretty nervous at this point. If banks were smart, they would stay out of the deal and formulate a different strategy for U.S. growth.

This story was originally Fintel.

The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/td-bank-group-cant-possibly-buy-first-horizon-at-the-agreement-price TD Bank group may not be able to buy First Horizon at agreed price

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