The mortgage industry will fall deeper into consolidation on the banking, nonbanking, and real estate investing side with the announcement that TD acquired First Horizon, and W. P. Carey announced a proposed merger with CPA: 18 in a $2.7 billion transaction.
TD Bank Group and First Horizon Corporation signed a definitive agreement for TD to acquire First Horizon in an all-cash transaction valued at $13.4 billion, or $25 for each common share of First Horizon.
First Horizon operates 412 branches and serves over 1.1 million consumer, business and commercial customers across 12 states. TD accelerated its long-term growth strategy through this transaction by acquiring a premier regional bank with an aligned culture and risk-management framework.
"First Horizon is a great bank and a terrific strategic fit for TD,” said Bharat Masrani, group president and CEO of 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. Working with the First Horizon team, TD will build upon the success of its strong franchise and deliver the legendary customer experiences that differentiate us in every market across our footprint.”
Following the acquisition, First Horizon President and CEO Bryan Jordan will join TD as vice chair of TD Bank Group, reporting to Bharat Masrani and will join the TD senior executive team. He will also be named to the Board of Directors of TD’s U.S. banking entities as director and chair. Jordan will also continue to be based in Memphis.
“As one team, with complementary businesses, distribution channels and a shared culture of best-in-class customer service, we will chart the next phase of growth together,” said Leo Salom, group head of U.S. retail at TD Bank Group, and president and CEO of TD Bank. “The Southeastern U.S. represents a tremendous opportunity for TD and the addition of First Horizon's commercial and specialty banking capabilities will position us as a leading national player in commercial banking. We will combine our resources and capabilities and continue to invest in the region as we focus on delivering the most differentiated banking experience in our markets.”
Meanwhile, W. P. Carey Inc., one of the nation's largest net lease real estate investment trust (REIT), announced its Board of Directors unanimously approved a merger in which Corporate Property Associates 18 — Global Incorporated ("CPA:18") will be acquired by W. P. Carey in a transaction valued at approximately $2.7 billion, including the assumption of debt.
Subject to terms of the agreement, CPA:18 stockholders will be entitled to receive a fixed exchange ratio of 0.0978 of a share of W. P. Carey common stock plus $3.00 of cash (subject to adjustments as merger sets forth) for each share of CPA:18 common stock held by them. This represents total consideration with an initial implied value of $10.45 per share.
W. P. Carey expects to fund the aggregate cash consideration with net proceeds from sales of certain CPA:18 assets, which will occur prior to the closing of the transaction and existing liquidity. Upon closing of the merger, W. P. Carey stockholders and CPA:18 stockholders will own approximately 93% and 7% of the combined company, respectively.
“This acquisition presents a unique and compelling opportunity to acquire assets we know extremely well that are aligned with our current portfolio, in a transaction that's immediately accretive to our Real Estate AFFO per share,” said W.P. Carey CEO Jason Fox. “We expect this accretion to largely replace the income we generated from managing CPA:18 with higher-quality lease revenues — and we see the potential for additional upside. Furthermore, it will essentially conclude our exit from Investment Management, further simplifying our business and enhancing our scale.”
