First Horizon and TD Bank announced on Thursday they have mutually agreed to call off a planned $13 billion merger that would have formed the country’s six-largest bank.
The banks said in a release that the agreement was dissolved after TD informed First Horizon it did not have a timetable for receiving regulatory approvals for the merger and was uncertain if and when they could be obtained. TD said the reasons for the uncertainty were unrelated to First Horizon.
The release states that TD has agreed to pay $200 million to First Horizon as a term of terminating the deal, in addition to the $25 million First Horizon was already due from the merger deal.
The deal was valued at $13.4 billion, or $25 per common share of First Horizon.
“While today’s announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability,” said Bryan Jordan, First Horizon’s chairman, president and CEO, in the release. “Our strong capital position, disciplined credit quality, expense control measures, and well-diversified and stable funding mix have enabled our business to navigate challenging banking industry dynamics and remain focused on executing our client-centric growth plan.”
Bharat Masrani, the president and CEO of TD Bank Group, said the decision to end the agreement provides “clarity” to colleagues and shareholders.
“Though disappointed with the outcome, we move forward with a strong, growing franchise in the United States, servicing more than 10 million customers across our footprint,” Masrani said.
The announcement comes after recent banking turmoil with the failure of First Republic Bank, which was sold to JPMorgan Chase on Monday. The Federal Deposit Insurance Corporation (FDIC) stepped in to arrange the deal after the bank appeared to be faltering and a bidding process for other banks to buy it was held.
First Republic had been in a difficult position since the collapses of Silicon Valley Bank and Signature Bank in March. It had some vulnerabilities in common with Silicon Valley Bank in that it had major losses on investment holding and most of its deposits were above the threshold that the FDIC insures.