TD Bank buying majority stake in Banknorth for $3.8B US
TD Bank is buying a majority interest in New England-based Banknorth Group Inc. for $3.8 billion US in cash and shares, the two financial institutions announced Thursday.
Each Banknorth shareholder will get $12.24 US in cash, 0.2351 of a TD common share and 0.49 shares of the new Banknorth stock, which will continue to be listed on the New York Stock Exchange. TD said it will also be permitted to buy additional Banknorth shares up to a limit of 66.6 per cent either in the open market or directly from Banknorth.
"This strategic acquisition provides us with an expanding beachhead in the Northeastern United States and an outstanding personal and commercial banking complement to our strong U.S. wealth management franchise," said Ed Clark, TD Bank president and CEO.
Clark also said the Banknorth acquisition will immediately boost TD's bottom line.
TD will initially be adding up to five members to the Banknorth board in addition to the current 14 directors.
Banknorth has 389 branches and 548 automated teller machines in six states of the northeastern U.S. The bank had $29.3 billion US in assets at the end of June.
Shares of TD bank fell 97 cents to close at $43.58 on the TSX, while Banknorth shares dropped 98 cents US to $33.90 US on the NYSE.