TD Bank calls off $13B takeover of U.S. lender First Horizon

TD Bank Group has called off its $13.4-billion US deal to acquire U.S. bank First Horizon Corp., citing regulatory uncertainty around the takeover.

TD said Thursday it reached a mutual agreement with the Tennessee-based bank to terminate the acquisition because of the uncertainty as to when and if it would be able to obtain regulatory approval.

TD chief executive Bharat Masrani said this decision provides clarity for 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 in a statement.

TD had said earlier this year that it did not expect to receive regulatory approval for the First Horizon deal by a May 27 deadline, but it was in talks to extend the closing date window.

The cancellation of the deal comes amid upheaval in the U.S. banking sector.

The collapse of Silicon Valley Bank and Signature Bank earlier this year put pressure on the U.S. banking sector and led to calls from some for TD to walk away from the deal it first announced in February 2022.

U.S. regulators also closed First Republic Bank on Monday and sold the vast majority of its operations to JPMorgan Chase in what was the second-largest bank failure in U.S. history.

Under the terms of the agreement, TD will pay First Horizon a $200-million US break fee. The payment is in addition to a $25-million US fee reimbursement owed to First Horizon under the merger agreement.

The First Horizon preferred shares purchased by TD Bank will continue to reflect a conversion price of $25 US per share.