First Horizon stock slumped more than 40% in premarket trading Thursday after its planned $13.4 billion acquisition by TD Bank was called off. The banks said they had agreed to scrap the deal because TD was unsure when and if it would get regulatory approval. In March, TD had said it was "fully committed" to the all-cash takeover, as concerns mounted over its approval.
First Horizon and TD Bank have called off a $13 billion deal that would have formed America's sixth-largest bank after both parties mutually abandoned the agreement. The stock closed at $15.05 a share Wednesday and plunged another 50% in premarket trading Thursday following the announcement of the canceled merger.
Other regional bank stocks have also tumbled recently, with PacWest Bank exploring "all strategic options" after its share price was cut in half in after-hours trading following a Bloomberg report that it was considering a sale.
The now-abandoned deal between First Horizon and Toronto-Dominion (TD) Bank would have had significant impacts on the Triangle's banking community.
Toronto-Dominion CEO Bharat Masrani stated he remained fully committed to First Horizon's $13.4 billion takeover despite its stock trading 40% below TD's offer price before ultimately abandoning plans for integration on May 4th due to uncertainty regarding U.S regulators' timing for approving such transactions.
Following this development, shares of Memphis-based First Horizons plummeted further—by an additional 43%. This marked decline is thought to be due in part to increased skepticism surrounding similar deals involving other financial institutions like SVB Financial Group or even competitor firms like San Francisco-based First Republic.
While some similarities exist between these collapsed mergers—such as executives underestimating market shifts resulting from rising interest rates or deposit runs—the unique characteristics of each bank involved cannot be discounted. First Horizons, for example, has a more diversified portfolio than SVB Financial Group.
First Horizon shares dropped significantly after the merger with TD Bank was terminated due to a prolonged regulatory approval process. Shares in the regional firm had fallen below its deal price and the bank could not secure a "timetable for regulatory approvals" since announcing the merger in 2022.
As part of this decision, TD will pay First Horizon $200 million in cash and $25 million in reimbursement fees. In response to these developments, First Horizon CEO Bryan Jordan characterized the failed merger as "unfortunate and unexpected," adding that his company remains fully committed to growing independently from here on out by leveraging their existing strengths and stability within the financial sector.
This is a developing story and will be updated as additional information becomes available.