Saturday, June 04, 2022

First Horizon shareholders approve proposed $13.4B deal with TD

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First Horizon Building in Downtown Memphis
STEPHEN MACLEOD | MBJ

By John Klyce – Reporter, Memphis Business Journal
May 31, 2022

First Horizon announced on Feb. 28 it had entered into an agreement to be acquired by Toronto-based TD Bank Group, in an all-cash transaction valued at $13.4 billion, or $25 per share.

Now, the Memphis-based institution has taken a major step toward completing the deal — it’s gained shareholder approval.

First Horizon held a special meeting of shareholders on Tuesday, May 31, at its Downtown headquarters, to consider and vote on the merger proposal, as well as other proposals related to the merger. According to a press release, shareholders voted to approve the deal. The $25 per share is a significant premium over First Horizon's stock price on Jan. 6, when First Horizon was approached about the merger. That day, the price closed at $18.09. On Friday, May 27, First Horizon's stock price closed at $23.10.

"Approval of the transaction demonstrates the confidence our shareholders have in the financial and strategic benefits of the transaction and the value it provides our associates, clients, and communities," said president and CEO Bryan Jordan, in a press release. "Following the completion of the transaction, the combined organization will have immediate scale benefits and be well positioned to create extraordinary value with a shared customer-centric strategy and broader client capabilities."

Over the past few months, more details about the transaction with TD have been revealed, with a proxy statement filed with the U.S. Securities and Exchange Commission (SEC) containing a wealth of information.

For example, a section of the proxy is dedicated to a timeline of the deal's progress, charting negotiations from the first inquiry received by president and CEO Bryan Jordan on Jan. 6, to the execution of the agreement on Feb. 27.

It contains Jordan’s employment agreement with TD — which includes a $9 million retention award, in the form of restricted stock units — and the golden parachute compensation executives could receive, as a result of the merger. These aren't necessarily guaranteed payouts, because certain employment conditions in their change-in-control agreements (CICs) must be met to trigger those elements of the compensation. But all together, the bank’s leaders could receive a total of nearly $100 million.

The proxies also note TD’s commitment to the Bluff City, asserting that it “intends to maintain significant business, employment, and community engagement in the Memphis metro area following the closing.”

This tracks with what executives have said previously. First Horizon is the last of the large, publicly traded banks based in Memphis. Previously, Union Planters Bank and National Commerce Financial Corp. were also headquartered here. But Union Planters was acquired by Regions in 2004 for $6 billion, while National Commerce was acquired by SunTrust that same year for $6.98 billion.

The number of local employees at those institutions dropped over time after the acquisitions; and when the deal was announced, MBJ asked Jordan how First Horizon can avoid a similar fate. Here’s what he said:
“If I look at other mergers TD has done in the past, what they’ve shown is not only the ability to maintain employment but to leverage the capabilities of organizations, and, in often cases, grow employment. This was a rapidly growing organization, and I think we have a strong ability in this combination to minimize the adverse impact on the communities that we serve."

Post-acquisition, the new TD Bank Group would have more than 2,600 branches and nearly 30 million customers. In the U.S., First Horizon's $89 billion in assets would push the combined TD Bank Group past $600 billion in assets. The U.S operations of TD Bank stands to hit 10.7 million customers across 1,560 locations in 22 states. The First Horizon-TD transaction is expected to close in November 2022.

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