Dive Brief:

• TD Bank plans to acquire Memphis, Tennessee-based First Horizon Bank in an all-cash transaction valued at $13.4 billion, it said in a press release Monday. 
• The deal would expand TD's footprint in the Southeast and make the U.S. arm of the Toronto-based bank the sixth-largest retail bank in the country, with roughly $614 billion in assets, the company said.
• The transaction, which would give First Horizon shareholders $25 per share, is expected to close this fall. However, TD will pay an additional $0.65 per share if the deal is not completed before Nov. 27. The deal will be terminated if it does not close by Feb. 27, 2023, unless it is extended.

Dive Insight:

Buying First Horizon would add around $55 billion of loans and $75 billion of deposits to TD’s balance sheet, the Canadian bank said Monday. It would also give TD a network of 1,560 locations across 22 states, with more than 10.7 million U.S. customers.

TD said it does not plan to close any of First Horizon’s 412 branches, adding it intends to retain all client-facing bankers. The Toronto bank, however, forecasts $1.3 billion in merger and integration costs, and estimates around $610 million in pretax cost synergies. First Horizon CEO Bryan Jordan will join TD as vice chair of the bank group, and report to TD CEO Bharat Masrani. 

"First Horizon is a great bank and a terrific strategic fit for TD," Masrani said. "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." 

Monday's deal is certainly the largest TD has undertaken since Masrani took the helm of the bank in 2014. But it has reportedly been in the running for other acquisitions. Reuters reported in November it was among the suitors in BNP Paribas' move to offload Bank of the West. However, fellow Canadian bank BMO agreed to buy that from the French finance giant in December for $16.3 billion

"With respect to major mergers and acquisitions in the United States, we’re very open," Masrani told Bloomberg in March 2021.

TD already has a retail presence in Virginia, North Carolina, South Carolina and Florida, but the First Horizon acquisition will further expand the Canadian lender’s footprint across the region.

First Horizon itself grew into a top-25 retail bank in 2020, when it finalized its $3.9 billion acquisition of Louisiana-based Iberiabank.

"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," Jordan said. "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."

TD is paying a 37% premium over First Horizon's closing share price from Friday, according to The Wall Street Journal. But the bank appears all-in on the move.

"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," Leo Salom, TD’s U.S. CEO, said Monday.