TORONTO and CHERRY HILL, N.J. and MEMPHIS, Tenn., Feb.
28, 2022 /PRNewswire/ -- TD Bank Group ("TD" or "the
Bank") (TSX and NYSE: TD) and First Horizon Corporation ("First
Horizon") (NYSE: FHN) today announced that they have signed a
definitive agreement for TD to acquire First Horizon in an all-cash
transaction valued at US$13.4
billion, or US$25.00 for each
common share of First Horizon. Through this financially compelling
transaction, TD accelerates its long-term growth strategy in
the United States by acquiring a
premier regional bank with an aligned culture and risk-management
framework.
"First Horizon is a great bank and a terrific strategic fit for
TD. It provides TD with immediate presence and scale in highly
attractive adjacent markets in the U.S. with significant
opportunity for future growth across the Southeast," said Bharat
Masrani, Group President and Chief Executive Officer, TD. "Working
with the First Horizon team, TD will build upon the success of its
strong franchise and deliver the legendary customer experiences
that differentiate us in every market across our footprint."
Following the closing of the transaction, Bryan Jordan, President and Chief Executive
Officer of First Horizon, will join TD as Vice Chair, TD Bank
Group, reporting to Bharat Masrani and will join the TD Senior
Executive Team. He will also be named to the Boards of Directors of
TD's U.S. banking entities as a director and Chair. Jordan will
continue to be based in Memphis.
"We have built a very strong business at First Horizon, and by
joining forces with TD, we will create extraordinary value for our
key stakeholders with a shared customer-centric strategy, enhanced
scale and a broader product set for our clients. This is a true
growth story," said Jordan. "We have long respected TD as a leader
in U.S. banking and are confident that its continued and growing
investments in our local markets will extend our long history of
community support. Thank you to our First Horizon associates for
their efforts and dedication to our clients and communities as we
continue to deliver for them every day. We look forward to
successfully completing this transaction and are excited to join
TD."
"I am very pleased that Bryan and talented leaders from across
First Horizon will join TD. Their deep customer and community
relationships and proven success driving growth will be of
tremendous value as we integrate our teams and deliver for the
millions we serve," added Masrani.
Leo Salom, Group Head, U.S.
Retail, TD Bank Group, and President and CEO, TD Bank, America's
Most Convenient Bank®, will lead the
combined businesses.
"I am excited to welcome First Horizon's associates, leaders and
valued customers to TD once the transaction closes. As one team,
with complementary businesses, distribution channels and a shared
culture of best-in-class customer service, we will chart the next
phase of growth together," said Salom. "The Southeastern U.S.
represents a tremendous opportunity for TD and the addition of
First Horizon's commercial and specialty banking capabilities will
position us as a leading national player in commercial banking. We
will combine our resources and capabilities and continue to invest
in the region as we focus on delivering the most differentiated
banking experience in our markets."
A Top 6 U.S. Bank
On a pro forma basis excluding merger adjustments, TD's U.S.
franchise1 will be a top 6 U.S. bank, with approximately
US$614 billion in assets and a
network of 1,560 stores, serving over 10.7 million U.S. customers
across 22 states; globally, TD Bank Group will have approximately
C$1,841 billion in assets, with over
2,600 branches serving the needs of more than 27.5 million
customers2.
First Horizon is headquartered in Memphis, Tennessee, with assets of
US$89 billion as of December 31, 2021. First Horizon operates 412
branches and serves over 1.1 million consumer, business and
commercial customers across 12 states. TD will benefit from First
Horizon's strong regional presence, including leadership positions
in Tennessee and Louisiana, additional density in Florida, the Carolinas and Virginia, and important footholds in the
attractive Atlanta, Georgia, and
Dallas and Houston, Texas markets.
Collectively, populations in First Horizon's markets are
expected to grow approximately 50% faster than the U.S. national
average, with some markets far exceeding that level, offering
important future growth opportunities as TD invests in the
region.
Transaction Highlights
The transaction is expected to be immediately accretive at
closing to TD's adjusted EPS and over 10% accretive to 2023E
adjusted EPS on a fully-synergized basis3. The
transaction is expected to result in a fully-synergized return on
invested capital of 10% in 20234. The purchase price
represents a 9.8 times multiple of First Horizon's 2023E
fully-synergized earnings4 and a 2.1 times multiple to
First Horizon's estimated tangible book value at close5.
TD expects to achieve approximately US$610
million in pre-tax cost synergies equal to 33% of First
Horizon's 2023E non-interest expense6 through a
combination of technology and systems consolidation, and other
operational efficiencies. TD expects to incur total merger and
integration costs of US$1.3 billion
primarily in the first two years following close.
The transaction is expected to close in the first quarter of
TD's 2023 fiscal year, and is subject to customary closing
conditions, including approvals from First Horizon's shareholders
and U.S. and Canadian regulatory authorities. If the transaction
does not close prior to November 27,
2022, First Horizon shareholders will receive, at closing,
an additional US$0.65 per share on an
annualized basis for the period from November 27, 2022 through the day immediately
prior to the closing. The transaction will terminate, unless
otherwise extended, if it does not close by February 27, 2023.
TD expects to use excess capital on its balance sheet for the
transaction, reflecting its robust capital and liquidity position.
Concurrent with this announcement, TD separately announced that the
automatic share purchase plan established for its normal course
issuer bid will automatically terminate in accordance with its
terms.
At close, TD's Common Equity Tier 1 ratio is expected to be
above 11%7.
Based on First Horizon's December 31,
2021 balance sheet, the acquisition would add approximately
US$55 billion of loans and
US$75 billion of deposits to TD's
balance sheet, and TD would expect to take a credit mark at close
of US$880 million, or 161 basis
points of loans.
In addition, TD has agreed to invest US$494 million in non-voting First Horizon
preferred stock (convertible in certain circumstances into up to
4.9% of First Horizon's common stock) to support First Horizon's
growth and franchise enhancement, including employee retention
programs.
A Shared Commitment to Local Communities
Once the transaction is completed, Memphis, First Horizon's current headquarters,
will be an important regional hub for TD in the U.S. Southeast,
supporting customers and operations and contributing to local
communities and economies. TD is also committed to retaining First
Horizon's client-facing bankers, with no planned branch closures as
a result of the transaction. In addition, upon closing,
US$40 million will be contributed to
a First Horizon foundation.
TD's purpose, to enrich the lives of our customers,
communities and colleagues, is embedded in the Bank's strategy
and is reflected in its unique and inclusive culture.
The TD Ready Commitment brings TD's philanthropy, people and
business together to deliver positive impact in local markets.
"First Horizon and TD share a common belief that we can only
thrive when the communities in which we live and work thrive. TD is
committed to growing our presence and investments across the states
in which First Horizon operates," concluded Masrani.
Advisors
TD Securities and J.P. Morgan served as financial advisors and
Simpson Thacher & Bartlett LLP and Torys LLP served as legal
advisors to TD. Morgan Stanley & Co. LLC served as financial
advisor and Sullivan and Cromwell LLP served as legal advisor to
First Horizon.
Conference call and supplemental information
TD will host a conference call on February 28 at 8:00 a.m.
ET. Presentation materials will be available on the TD
website at www.td.com/investor in advance of the call. A
listen-only telephone line will be available at 416-641-6150 or
1-866-696-5894 (toll free) and the passcode is 2727354#.
The audio webcast will be archived
at www.td.com/investor. Replay of the teleconference will
be available from 5:00 p.m. ET on
February 28, 2022, until 11:59 p.m. ET on March 14,
2022 by calling 905-694-9451 or 1-800-408-3053 (toll free)
and the passcode is 8313844#.
About TD
The Toronto-Dominion Bank and its subsidiaries are collectively
known as TD Bank Group ("TD" or the "Bank"). TD is the fifth
largest bank in North America by
assets and serves more than 26 million customers in three key
businesses operating in a number of locations in financial centres
around the globe: Canadian Retail, including TD Canada Trust, TD
Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD
Insurance; U.S. Retail, including TD Bank, America's Most
Convenient Bank®, TD Auto Finance U.S., TD Wealth
(U.S.), and an investment in The Charles Schwab Corporation; and
Wholesale Banking, including TD Securities. TD also ranks among the
world's leading online financial services firms, with more than 15
million active online and mobile customers. TD had CDN$1.7 trillion in assets on October 31, 2021. The Toronto-Dominion Bank
trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
About First Horizon
First Horizon (NYSE: FHN), with $89.1
billion in assets as of December 31,
2021, is a leading regional financial services company,
dedicated to helping our clients, communities and associates unlock
their full potential with capital and counsel. Headquartered in
Memphis, TN, the banking
subsidiary First Horizon Bank operates in 12 states across the
southern U.S. The Company and its subsidiaries offer commercial,
private banking, consumer, small business, wealth and trust
management, retail brokerage, capital markets, fixed income,
mortgage, and title insurance services. First Horizon has been
recognized as one of the nation's best employers by Fortune and
Forbes magazines and a Top 10 Most Reputable U.S. Bank. More
information is available at www.firsthorizon.com
Statement Regarding Forward-looking Information
This communication contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") and applicable Canadian
securities legislation, with respect to First Horizon Corporation's
("First Horizon") and The Toronto-Dominion Bank's ("TD Bank")
beliefs, plans, goals, expectations, and estimates. Forward-looking
statements are not a representation of historical information, but
instead pertain to future operations, strategies, financial results
or other developments. The words "believe," "expect," "anticipate,"
"intend," "target", "plan", "estimate," "should," "likely," "will,"
"going forward" and other expressions that indicate future events
and trends identify forward-looking statements.
Forward-looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant
business, operational, economic and competitive uncertainties and
contingencies, many of which are beyond the control of First
Horizon and TD Bank, and many of which, with respect to future
business decisions and actions, are subject to change and which
could cause actual results to differ materially from those
contemplated or implied by forward-looking statements or historical
performance. Examples of uncertainties and contingencies include
factors previously disclosed in First Horizon's and TD Bank's
respective reports filed with the U.S. Securities and Exchange
Commission (the "SEC"), and TD Bank's other filings with Canadian
regulators, as well as the following factors, among others: the
occurrence of any event, change or other circumstances that could
give rise to the right of one or both of the parties to terminate
the definitive merger agreement between First Horizon and TD Bank;
the outcome of any legal proceedings that may be instituted against
First Horizon or TD Bank, including potential litigation that may
be instituted against First Horizon or its directors or officers
related to the proposed transaction or the definitive merger
agreement between First Horizon and TD Bank to the proposed
transaction; the timing and completion of the transaction,
including the possibility that the proposed transaction will not
close when expected or at all because required regulatory,
shareholder or other approvals are not received or other conditions
to the closing are not satisfied on a timely basis or at all, or
are obtained subject to conditions that are not anticipated;
interloper risk; the risk that any announcements relating to the
proposed combination could have adverse effects on the market price
of the common stock of either or both parties to the combination;
the possibility that the anticipated benefits of the transaction
will not be realized when expected or at all, including as a result
of the impact of, or problems arising from, the integration of the
two companies or as a result of the strength of the economy and
competitive factors in the areas where First Horizon and TD Bank do
business; certain restrictions during the pendency of the merger
that may impact the parties' ability to pursue certain business
opportunities or strategic transactions; the possibility that the
transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; diversion of
management's attention from ongoing business operations and
opportunities; reputational risk and potential adverse reactions or
changes to business or employee relationships, including those
resulting from the announcement or completion of the transaction;
First Horizon and TD Bank success in executing their respective
business plans and strategies and managing the risks involved in
the foregoing; currency and interest rate fluctuations; success of
hedging activities; material adverse changes in economic and
industry conditions, including the availability of short and
long-term financing; general competitive, economic, political and
market conditions; changes in asset quality and credit risk; the
inability to sustain revenue and earnings growth; inflation;
customer borrowing, repayment, investment and deposit practices;
the impact, extent and timing of technological changes; capital
management activities; other actions of the Board of Governors of
the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the Office
of the Superintendent of Financial Institutions legislative and
regulatory actions and reforms; the pandemic created by the
outbreak of COVID-19 and its variants, and resulting effects on
economic conditions, restrictions imposed by public health
authorities or governments, fiscal and monetary policy responses by
governments and financial institutions, and disruptions to global
supply chains; and other factors that may affect future results of
First Horizon and TD Bank.
Assumptions about First Horizon and TD Bank's current and
expected financial performance (including balance sheet, income
statement and regulatory capital figures), expected capital
availability for the proposed transaction, expected closing date of
the proposed transaction, expected synergies (and timing to
achieve), integration and restructuring costs, assumed purchase
price accounting (including fair value marks), costs of financing,
foreign exchange rates, and future regulatory capital requirements,
including the Office of the Superintendent of Financial
Institutions' announced Basel III reforms effective in the second
quarter of fiscal 2023, were considered by TD Bank in estimating
its expected return on invested capital, adjusted EPS accretion
and/or TD Bank's expected regulatory capital ratios. Examples of
material assumptions made by TD Bank in the forward-looking
statements, including TD Bank's expectations regarding the costs
and financial impact of the transaction, include assumptions
regarding First Horizon's future net income, transaction costs,
transaction process, timeline to close and/or integrate the
acquisition, expected synergies, future TD Bank capitalization, tax
rate, currency conversion rate, and financial results. Assumptions
about TD Bank's integration plan, the efficiency and duration of
integration and the alignment of organizational responsibilities
were material factors TD Bank considered in estimating integration
costs.
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. Additional factors that
could cause results to differ materially from those contemplated by
forward-looking statements can be found in First Horizon's Annual
Report on Form 10-K for the year ended December 31, 2021, and in its subsequent
Quarterly Reports on Form 10-Q filed with the SEC and available in
the "Investor Relations" section of First Horizon's
website, www.firsthorizon.com, under the heading "SEC
Filings" and in other documents First Horizon files with the SEC,
and in TD Bank's Annual Report on Form 40-F for the year ended
October 31, 2021 filed with the SEC
and available in the "Investor Relations" section of TD Bank's
website, www.td.com, under the heading "Regulatory
Filings" and in other documents TD Bank files with the SEC
(available at www.sec.gov) and applicable securities
regulators in Canada (available
at www.sedar.com). All such factors, as well as other
uncertainties and potential events, and the inherent uncertainty of
forward-looking statements, should be considered carefully when
making decisions with respect to First Horizon and TD Bank.
Any forward-looking statements contained in this document
represent the views of First Horizon and TD Bank only as of the
date hereof and are presented for the purpose of assisting their
respective shareholders and analysts in understanding First
Horizon's and TD Bank's financial position, objectives and
priorities and anticipated financial performance as at and for the
periods ended on the dates presented, and may not be appropriate
for other purposes. Neither First Horizon nor TD Bank undertakes to
update any forward-looking statements, whether written or oral,
that may be made from time to time by or on its behalf, except as
required under applicable securities legislation.
Important Other Information
In connection with the proposed transaction, First Horizon
intends to file relevant materials with the SEC, including a proxy
statement on Schedule 14A.
This communication does not constitute an offer to sell or a
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. SHAREHOLDERS OF FIRST HORIZON ARE URGED TO
READ, WHEN AVAILABLE, ALL RELEVANT DOCUMENTS (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) FILED WITH THE SEC, INCLUDING
FIRST HORIZON'S PROXY STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT FIRST HORIZON AND THE PROPOSED
TRANSACTION.
Investors and shareholders of First Horizon will be able to
obtain a free copy of the proxy statement as well as other relevant
documents filed with the SEC without charge at the SEC's website
(http://www.sec.gov). Copies of the proxy statement and the filings
with the SEC that will be incorporated by reference in the proxy
statement can also be obtained, without charge, by directing a
request to Clyde A. Billings Jr.,
First Horizon, 165 Madison, Memphis,
TN 38103, telephone (901) 523-4444.
Participants in the Solicitation
TD Bank and First Horizon and certain of its directors,
executive officers and employees may be deemed to be participants
in the solicitation of proxies in respect of the proposed
transaction under the rules of the SEC. Information regarding First
Horizon's directors and executive officers is available in the
proxy statement for its 2021 annual meeting of shareholders, which
was filed with the SEC on March 15,
2021, and certain of its Current Reports on Form 8-K. Other
information regarding the participants in the solicitation of
proxies in respect of the proposed transaction and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement and other
relevant materials to be filed with the SEC. Free copies of these
documents, when available, may be obtained as described in the
preceding paragraph.
For more information:
TD
Investor Relations: Brooke Hales,
416-307-8647, Brooke.Hales@td.com
Media Relations: Natasha Ferrari,
416-400-9098, Natasha.Ferrari@td.com
First Horizon
Investor Relations: Ellen Taylor,
901-523-4450
Media Relations: Beth Ardoin,
337-278-6868
FHN-G
1 TD Group US Holdings and First Horizon as of
December 31, 2021. Pro forma metrics
for customers and stores reflect latest reported figures
2 TD Bank Group as of October 31,
2021 and First Horizon as of December
31, 2021 using a USD-CAD exchange rate of 1.26x. Pro forma
metrics for customers and branches reflect latest reported
figures
3 Adjusted EPS is a non-GAAP measure. Non-GAAP
financial measures and ratios used in this press release are not
defined terms under IFRS (for TD Bank) or under U.S. GAAP (for
First Horizon) and, therefore, may not be comparable to similar
terms used by other issuers. Adjusted EPS accretion metrics are
calculated on the basis of average analyst consensus estimates for
TD's adjusted net income and median analyst consensus estimates for
First Horizon's adjusted net income. Fully-synergized metrics are
calculated on the basis that expected cost synergies are fully
realized and that the transaction closes on November 1, 2022
4 Calculated on the basis of the median analyst
consensus estimate of First Horizon's adjusted net income.
Fully-synergized metrics are calculated on the basis that expected
cost synergies are fully realized and that the transaction closes
on November 1, 2022
5 First Horizon's balance sheet at close has been
estimated based on the median analyst consensus estimate of First
Horizon's adjusted net income and dividends
6 Calculated on the basis of the median analyst
consensus estimate of First Horizon's non-interest expense
excluding the amortization of intangibles
7 Based on TD's and First Horizon's estimated balance
sheets, and assuming transaction closing on November 1, 2022, including transaction related
impacts
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SOURCE First Horizon Corporation