By Ketk Saxena
Investing.com – Last week, TD (TSX:TD) made headlines as the most shorted bank in the world.
While in part due to general concern about bank failures, the focus has been on TD largely due to its exposure to US markets and proposed acquisition of Memphis-based First Horizon bank.
The deal, unveiled in February 2022, valued First Horizon at over US$13 billion, represented by the US$25 per share takeover offer.
Since then however, First Horizon shares have tanked well below the offer price, as the failure of Silicon Valley Bank and First Republic set of a crisis of confidence in US regional banks.
On march 8, as the initial shock of bank failures rippled through markets, First Horizon Plunges 38% below TD’s bid offer, and its biggest decline since the last financial crisis in 2008.
In this context, analysts now widely expect the deal to be renegotiated, but to still go ahead as TD seeks to expand its US exposure.
Robert Wessel, managing partner of Hamilton Capital Partners Inc notes, “The reasons [TD] wanted to buy in the first place haven’t gone away. Tennessee and Florida and the Carolinas are still great banking markets”.
“It fits very nicely with the geography of TD’s U.S. platform.”
Wessel believes that a price renegotiation is the “most likely outcome.”
However, TD also has the option to walk away from the deal if regulatory approval is not received by May 27, the deadline for the deal to be finalized. TD does not expect that regulatory approval will be reached by this time.