SEU TD Bank and First Horizon Discussion

Explain the steps that each company needed to take preceding the announcement to the public of the merger between TD Bank and First Horizon.

TD Stories
NEWS
TD to Expand in the
Southeastern U.S.
with Acquisition of
First Horizon
18 MINUTE READ
• FEB 28, 2022
•A
ccelerates U.S. growth
strategy, creating top
6 U.S. bank with immediate
presence and scale in fast
growing TD-adjacent markets
• Creates important future growth
opportunities through
combination of First Horizon and
:
TD capabilities and customer-
centric business models
• Financially compelling; all-cash
transaction leverages TD’s strong
capital
position and liquidity; immediately
accretive to adjusted EPS at
closing
• TD committed to retaining
client-facing bankers with no
planned closures of First Horizon
banking centers in connection
with the transaction
• TD to expand upon First
Horizon’s investments in local
communities
TORONTO, CHERRY HILL and
MEMPHIS – February 28, 2022 -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 riskmanagement 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 O”icer, 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
O”icer 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.
franchise[1] 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
customers[2].
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 basis[3]. The
transaction is expected to result
in a fully-synergized return on
invested capital of 10% in 2023[4].
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 close[5].
TD expects to achieve
approximately US$610 million in
pre-tax cost synergies equal to
33% of First Horizon’s 2023E noninterest expense[6] through a
combination of technology and
systems consolidation, and other
operational e”iciencies. 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 nonvoting 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 clientfacing 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 416-6416150 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 Forwardlooking 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 TorontoDominion 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 o”icers 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 O”ice of the Comptroller of
the Currency, the Federal Deposit
Insurance Corporation and the
O”ice 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 O”ice 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 e”iciency 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
o”icers 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 o”icers 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
[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 USDCAD 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. Fullysynergized 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 noninterest 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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