What happened
Investors continued to be skittish about bank stocks on Thursday, which was understandable given the continuing turmoil with regional lenders. One member of that group escaped the clutches of the bear that day, however: Toronto-Dominion (TD -1.04%). The market was relieved that the company isn't going forward with a planned bank buyout after all, and it closed the day up 1% on a day the Dow was down 0.86%
So what
In a nervous environment like this, few consider banks to be hot investments -- either as stocks or as takeover targets. Wisely, Toronto-Dominion and the lender currently in its sights, First Horizon (FHN 4.05%), announced Thursday they are terminating their merger agreement.
The deal had been on the burner for quite some time. It was originally announced in February 2022, and the plan was for Toronto-Dominion to acquire the Southeastern regional banking group for $13.4 billion, entirely in cash.
This is a typical move in Toronto-Dominion's playbook. The Canada-based lender has assertively expanded into the U.S. over the years by making similar deals with American peers.
At the time, Toronto-Dominion was clearly champing at the bit to be First Horizon's owner. In announcing the deal, it quoted its CEO Bharat Masrani as saying that the Southern lender: "is a great bank and a terrific strategic fit for TD. It provides TD with immediate presence and scale in highly attractive adjacent markets in the U.S. with significant opportunity for future growth across the Southeast."
Now what
While this is largely true, regional banks are very much under the microscope these days due to the recent collapses and struggles throughout the segment. A big acquisition of one certainly would have met with significant investor backlash; it's smart and prudent for Toronto-Dominion to be withdrawing from the First Horizon deal, at least for now.
