The stock market moved into the new week on an uncertain note, with investors reacting with concern over escalations in the financial battle between Western nations and Russia. In addition to sanctions, the U.S. and other countries have looked at more extreme measures like withdrawing access to payment transfer infrastructure. That has Wall Street worried about the next shoe to drop. As of 8 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.67%) were down 367 points to 33,627. S&P 500 (^GSPC 0.87%) futures had dropped 60 points to 4,320, while Nasdaq Composite (^IXIC 1.11%) futures had sunk 185 points to 13,996.
One might think that the threat of war might make some companies think twice about making strategic combinations. But that wasn't the case on Monday, as shares of First Horizon (FHN 1.91%) and Renewable Energy Group (REGI) became the latest companies to find themselves as acquisition targets. Both stocks moved sharply higher, and it appears that acquirers are anxious to find ways to grow through strategic combinations.
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First Horizon looks northward
Shares of First Horizon soared more than 32% in premarket trading on Monday. The Memphis-based regional bank got an offer from a northern neighbor looking to expand its reach further into the southeastern U.S. market.
North American banking giant Toronto-Dominion Bank (TD 0.81%) announced that it has signed an agreement to acquire First Horizon in a deal that puts a value of $13.4 billion on the regional bank. Under the terms of the deal, First Horizon shareholders will receive $25 per share in cash, which is 37% above where the bank stock closed on Friday.
For TD, the strategy is obvious. The Toronto-based bank established a foothold in the U.S. market in the Northeast, but over the years, it has expanded southward to broaden the size of its American operations. With the move, TD will become a top-six bank in the U.S. on a pro forma basis, serving more than 10.7 million American customers in 22 states.
Moreover, the Southeast has seen above-average growth rates in recent years and is likely to continue to do so. When you add in the fact that many of Toronto-Dominion's Canadian customers spend their winters in the Southeast, it only makes First Horizon an even more attractive target to help aid TD's broader expansion plans.
An energetic deal
Elsewhere, shares of Renewable Energy Group climbed even more sharply, rising 38% in premarket trading. The move came amid the revelation that a global leader in energy was interested in buying the sustainable fuel specialist.
Renewable Energy Group and Chevron (CVX 1.20%) announced Monday morning that they had come to an agreement on an acquisition. The deal values Renewable Energy Group at $3.15 billion and will involve paying shareholders $61.50 per share in cash for their Renewable Energy stock.
Chevron recognized Renewable Energy's role as a founder and innovator in the sustainable fuel industry. The acquisition will also help Chevron move more quickly toward achieving its long-term goals of growing its capacity for renewable fuel production to 100,000 barrels per day by 2030. Renewable Energy will also add to Chevron's feedstock supplies and network of pre-treatment facilities.
With Renewable Energy expanding its Geismar renewable diesel facility in Louisiana, the move couldn't have come at a better time for Chevron. As energy markets evolve in the transition from fossil fuels toward electric and renewables, investors in oil and gas can expect to see more deals like this one.
