Middle East

TD to Acquire Cowen for $1.3 Billion, Expanding Capital Markets

Toronto-Dominion Bank just months after making a historic deal to expand its U.S. retail operations by agreeing to acquire U.S. brokerage firm Cohen for $1.3 billion in cash. We have increased our presence in the capital market.
Toronto-Dominion agreed to pay $39 per share, according to a statement yesterday. The acquisition is likely to be “moderately accretive” to adjusted earnings per share next year, the Toronto-based company said. Bloomberg News reported last month that the bank was considering the deal.
Canada’s Second Largest Bank Addresses Relative Weakness in Capital Markets Business Compared to Competitors such as Royal Bank of Canada with Cowen Acquisition and Protects Against Potential Downturn in Retail Banking Business is useful for The deal, along with its planned $13.4 billion acquisition of First Horizon Corp announced in February, also deepens Toronto-Dominion’s reach in the United States.
Bharat Masrani, CEO of Toronto Dominion, said, “Cowen is a leading independent dealer with the best U.S. equity business and a strong and diversified investment bank. We can accelerate our strategic U.S. growth plans,” said the statement.
Toronto-Dominion’s wholesale banking business accounted for approximately 11% of the company’s fiscal 2021 revenues. This equates to about 21% that Royal Bank gets from its capital markets division.
Cowen, which went public in 2006, posted net income of $289 million in 2020, up 38% year-over-year, in a record year for its initial public offering. In the past 12 months, he has acted as bookrunner in 55 of his IPOs, of which he was lead advisor in five, according to data compiled by Bloomberg. Toronto-Dominion has long sought expansion south as mergers in Canada’s highly concentrated banking sector were blocked by regulators. The company entered US retail banking in 2004 by purchasing his 51% stake in Banknorth Group Inc for his $3.8 billion.
Toronto-Dominion had more than 1,100 U.S. offices at the end of its most recent fiscal year and plans to add approximately 400 more offices once the First Horizon acquisition is complete. The transaction expands Toronto-Dominion beyond its East Coast footprint into markets such as Tennessee, Louisiana and Texas.
With the Cowen acquisition, TD Securities will add 1,700 employees from the New York-based company, for a total of 6,500 employees in 40 cities worldwide. The transaction has been approved by the boards of directors of both companies and is expected to close in the first quarter of next year.
Cowen Chairman and CEO Jeffrey Solomon will join senior leadership of TD Securities, reporting directly to Unit President and CEO Riaz Ahmed, and part of the combined business will be known as TD Cowen and will be led by Solomon. increase.
To fund the acquisition, Toronto-Dominion sold 28.4 million non-voting common shares of Charles Schwab Corp. for approximately $1.9 billion, reducing its ownership of the company from 13.4% to approximately 12%. Toronto Dominion said it has “no current intention to sell additional shares” of Charles Schwab.
Toronto-Dominion’s share price has fallen amid doubts about whether it can complete its acquisition of Memphis, Tennessee-based First Horizon, two major Canadian peers with a large presence in the United States, Royal & Co. Shares of Toronto-Dominion fell 14% through Friday this year, beating Royal Bank’s 7.2% decline and Bank of Montreal’s 6.3% decline. It was the worst performer among Canada’s six largest banks.
Stifel Financial analyst Mike Rizvanovic said in an interview before the Cowen deal was announced, “TD’s performance has been pretty lackluster, and much of it is happening on the regulatory front. “When you think about TD’s dynamics of where you can make money and deploy capital, if you’re on the wrong side of US regulators, it’s very important to them.” It’s a market, so it’s certainly not a good thing.”
President Joe Biden signed the executive order in July 2021, seven months before Toronto-Dominion announced the First Horizon deal, as part of a broader push to boost competition in the country. , urged regulators to scrutinize bank mergers more closely. Sen. Elizabeth Warren urged regulators to block the transaction in June after the Capitol Forum reported that Toronto-Dominion unfairly pressured customers to open certain accounts.Toronto-Dominion said the allegations were “completely baseless.”
“The regulatory approval process is on track and we remain confident in closing the transaction in the first quarter of fiscal 2023,” said spokeswoman Lisa of First Horizon. Hodgins said in an emailed statement. The transaction “brings value to both our organization, our employees, our customers and the communities we serve,” she said, adding that community leaders in the areas served by the two banks are excited about the merger. It said it had sent more than 300 letters to regulators in support of

http://www.gulf-times.com/story/722171/TD-to-buy-Cowen-for-1-3bn-to-bulk-up-capital-marke TD to Acquire Cowen for $1.3 Billion, Expanding Capital Markets

Back to top button