What happened

Shares of the investment bank Cowen (COWN) have surged nearly 25% as of 10:45 a.m. ET today after media outlets reported that Toronto-Dominion Bank (TD -0.35%) is considering an acquisition of the company.

So what

Citing anonymous sources, Bloomberg recently reported that TD has met with advisors to consider purchasing Cowen. The sources also added that a formal decision has not been made yet.

The deal, however, would not be entirely surprising, as TD has made it quite clear that it wants to expand its already large presence in the U.S. CEO Bharat Masrani has said publicly numerous times that the bank is willing to put excess capital to work through acquisitions.

Earlier this year, Masrani made good on that promise, with the bank announcing its plan to buy First Horizon Corp in an all-cash deal valued at $13.4 billion. Once completed, TD will become a top-six U.S. bank by assets.

"Given Cowen's depressed share price juxtaposed against what we view as a strong intermediate-term fundamental outlook, we are not overly surprised that acquisition interest would exist," JMP Securities analyst Devin Ryan wrote in a research note.

Now what 

Buying shares on acquisition interest can always be risky because there is no certainty that the deal will go through.

But given TD's track record this year and comments from Masrani, more acquisitions would certainly make sense. Ryan said he thinks the "clearing price" for Cowen is $50 to $60 per share, so there could be a lot more upside with shares currently trading below $30.

I do see the stock, which is trading at the undemanding valuation of 6.6 times forward earnings, as a reasonable buy right now.