Toronto Dominion Bank will acquire 51 percent of U.S.-based Banknorth Group Inc. in a $3.8 billion cash and stock deal that will allow TD to expand its reach in the Northeastern United States, the bank said Thursday.
The deal is expected to boost TD’s earnings and gives Banknorth the room to continue with its strategy of acquiring ”high potential” banks in strategic locations.
Under the terms of the agreement, each Banknorth shareholder will receive a package of $12.24 in cash, 0.2351 of a TD common share and 0.49 shares of the new Banknorth stock, which will continue to be listed on the New York Stock Exchange.
TD will initially be adding up to five members to the board in addition to the current 14 Banknorth directors, although TD will have the right to elect a majority of board members generally as long as it remains a majority shareholder.
Bill Ryan will join TD’s board and remain chairman, president and chief executive of Banknorth, which is headquartered in Portland, Maine.
TD, Canada’s no. 2 bank by assets, already has a foothold in the United States through Waterhouse. The deal is expected to close in February 2005, pending regulatory and shareholder approval.