First Horizon Corp (NYSE: FHN) tanked 40% this morning after it scrapped plans of merging with the Toronto-Dominion Bank (TSE: TD).
Details of the update that crashed First Horizon stock
The $13.4 billion deal that was first announced last year could have made TD the sixth-largest U.S. bank.
But the two banks have now mutually decided to end the agreement on lack of clarity around the timeline for regulatory approvals. Revealing what’s next for First Horizon, its CEO Bryan Jordan said today:
We’ll continue to build momentum. We’ve built strong capital base; it gives us tremendous flexibility. We’ll continue to serve our customers, communities, clients, and deliver value for them.
In April, the regional bank reported its financial results for the first quarter that were roughly in line with Street estimates. First Horizon stock is now down about 60% for the year.
Was it related to the ongoing turmoil in regional banks?
TD Bank will pay $200 million in cash to First Horizon in line with the termination agreement on top of $25 million fee reimbursement.
The stock market news arrives at a time when regional banks are struggling with a massive contraction in valuations. But on CNBC’s “Squawk on the Street”, CEO Jordan said today’s development wasn’t related to that.
We’ve worked very well for the last 14 months and worked very hard to win regulatory approvals. I take it at face value that we were unable to get a timeline for approval and we reached this agreement.
Unlike First Horizon stock, shares of TD Bank are roughly flat on Thursday. In April, the Canadian multinational was reported to have become the world’s most-shorted lender (read more).
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