TD Bank Financial Group has agreed to acquire Commerce Bancorp in a 75% stock and 25% cash deal valued at US$8.5 billion. Commerce shareholders stand to receive 0.4142 shares of TD Bank common stock and $10.50 in cash, for each share of Commerce. This values Commerce at $42.37/share based on TD's Monday closing price, representing up to a 7% premium over Commerce's Monday close. The deal is expected to close in April or May of 2008, subject to shareholder and regulatory approvals. TD Bank said it plans to take a one-time US$490M pre-tax restructuring charge. TD sees the transaction as $0.28 dilutive in fiscal 2008 and $0.22 dilutive in fiscal 2009 on a GAAP basis, or -$0.10 and flat on an adjusted basis, respectively. In a press release, TD Bank said the combined entity will have 2,000 branches in N. America and about one-quarter of a trillion dollars in deposits, "making it the first bank with critical mass in both the Canadian and US markets." Commerce Bancorp shares were last down 0.9% to $39.40 in pre-market trading, after climbing 2.5% to $39.74 on Monday. NYSE-listed shares of TD Bank were last off 5.4% to $72.75 in the pre-market, after gaining 0.3% to $76.94.
Sources: Press release, Bloomberg, MarketWatch, Reuters
Commentary: TD Bank Is RBC Capital's "Top Pick" • Canadian Banks Still Increasing Dividends • TD: No U.S. Subprime Exposure Means Great News for Canadian Banking
Stocks/ETFs to watch: TD, CBH
Earnings call transcript: Toronto Dominion Bank F3Q07
Related: TD Acquires Commerce Bancorp Presentation [pdf]
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