Canada’s TD canceled the $13.4 billion purchase of First Horizon

May 4 (Reuters) – Canada’s Toronto-Dominion Bank Group (TD.TO) canceled its $13.4 billion acquisition of First Horizon Corp (FHN.N) on Thursday, sending shares of the US regional bank down nearly 40% on the Premarket market. commerce.

First Horizon and TD said in a statement that they had mutually decided to terminate the transaction because there was no clarity on when they would receive regulatory approvals. TD will pay First Horizon $200 million, as well as pay $25 million in royalties.

TD’s biggest deal to date, which it launched more than a year ago, has faced months of regulatory uncertainty and Canada’s No. 2 lender under pressure from some investors to call off the purchase after the regional banking crisis in the United States.

A First Horizon spokesperson said of the US bank that the termination was only related to TD, which was unable to obtain approvals, and unrelated to the ongoing banking turmoil.

TD declined to comment after the news release.

“We are surprised that the parties did not reach an agreement on a lower price and believe there could be broader ramifications from walking away from the deal,” said John Aiken, an analyst at Barclays.

“This could affect potential partners’ willingness to sit across the table from TDs in the future,” Aiken added.

TD agreed to buy First Horizon in February last year to expand its presence in the United States. The Canadian lender also has a stake in Charles Schwab (SCHW.N) making it one of the markets with the most exposure to the US markets.

The deal’s collapse has already spooked already shaky sentiments toward US regional banks. Three of them have collapsed since February, after the deposit trip spiraled out of control.

The latest was First Republic Bank, which was taken over by regulators who then sold its assets to JPMorgan Chase & Co (JPM.N) earlier this week.

Average deposits at First Horizon fell 4% to $62.2 billion in the first quarter, compared to the end of last year.

TD, which acquired New York-based boutique investment bank Coin for $1.3 billion this year, was also in the bid for BNP Paribas’ US unit Bank of the West, but later lost that bid to Bank of the West. Montreal (BMO.TO).

ORTEX said Thursday that TD remains the world’s most-exposed banking stock, confirming its position early last month.

Additional reporting by Nikit Nishant in Bengaluru; Editing by Savio D’Souza

Our standards: Thomson Reuters Trust Principles.