Toronto-Dominion Bank’s planned acquisition of First Horizon went belly up on Thursday, with both parties reportedly parting ways due to hurdles in securing regulatory approval.
The Canadian lender announced the end of the merger on May 4 after having set the acquisition in motion in late February 2022.
“While today’s announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability,” said Bryan Jordan, who is chairman, president, and CEO of the Tennessee-based bank, per a joint statement with TD Bank.
First Horizon’s shares fell 33% in afternoon trading once the news of the failed deal broke, according to The Wall Street Journal.
The merger was worth $13.4 billion, and the acquisition of the mid-sized bank with $80.7 billion in assets as of March 31 would have made TD Bank the sixth-largest in the U.S., which raised alarms with regulators from the outset.
TD Bank is the second-largest bank in Canada, with a colorful past.
In 2020, the bank settled with the U.S. Consumer Financial Protection Bureau for $122 million after the agency discovered that customers had been charged overdraft fees for ATM transactions without obtaining their consent.
In February, TD Bank settled for $1.2 billion in a lawsuit claiming that it and four other banks — including HSBC and Bank of Houston — were involved in a 20-year $7 billion Ponzi scheme perpetrated by Allen Stanford, which was discovered in 2012.
In light of the canceled merger, TD Bank will pay First Horizon a $25 million reimbursement fee in addition to a $200 million cash payment, per the joint statement.
While this will help support First Horizon’s capital ratios, the financial institution now finds itself in an uncertain situation.
As reported by The Dallas Express, the recent collapses of First Republic Bank, Signature Bank, and Silicon Valley Bank have demonstrated the challenges currently faced by mid-sized and regional lenders.
