Business Context and Reporting Period
This Form 6-K filing by The Toronto-Dominion Bank (TD) reports a material change dated July 12, 2005, and filed on July 18, 2005. The filing concerns TD Banknorth Inc., a majority-owned subsidiary of TD Bank Financial Group, entering into a definitive agreement to acquire Hudson United Bancorp.
Key Financial Metrics and Transaction Details
- Transaction Value: Approximately $1.9 billion in aggregate merger consideration.
- Consideration Structure: Approximately 51% TD Banknorth common stock and 49% cash.
- Per Share Value: $21.07 cash plus a variable stock component (0.7247 times the average closing price of TD Banknorth stock over a specific period), valued at $42.78 per share based on July 11, 2005 closing prices.
- Financing: The cash portion is financed by TD Banknorth selling approximately 29.6 million shares of its common stock to The Toronto-Dominion Bank at $31.79 per share.
- Pro Forma Scale: The combined entity is projected to have approximately 590 branches, 751 ATMs, and over $26 billion in deposits across eight northeastern states.
- Parent Company Assets: TD Bank Financial Group reported CDN$359 billion in assets as of April 30, 2005.
Material Changes Versus Prior Period
The primary material change is the strategic acquisition of Hudson United Bancorp. This transaction expands TD Banknorth's franchise in Southern Connecticut and Eastern New York and extends its presence into New Jersey and Philadelphia. The filing notes that on a pro forma basis, TD Bank Financial Group's percentage ownership of TD Banknorth will decrease slightly immediately following the transaction, though management intends to maintain or increase this ownership level through share repurchases or open market purchases.
Guidance, Outlook, and Risks
Earnings Accretion Outlook
- 2006: Expected to be accretive to TD Bank Financial Group earnings by approximately CDN $0.01 per share (reported basis) and CDN $0.02 per share (before amortization of intangibles).
- 2007: Assuming full phase-in of cost savings and restoration of ownership levels, accretion is anticipated to be approximately CDN $0.11 per share (reported basis) and CDN $0.12 per share (before amortization of intangibles).
Conditions and Risks
Consummation of the merger is subject to customary conditions, including shareholder approval from both Hudson United and TD Banknorth, and requisite regulatory approvals. The filing includes a standard forward-looking statement disclaimer citing risks such as:
- Failure to realize estimated cost savings within the expected timeframe.
- Revenues lower than expected post-acquisition.
- Increased competitive pressure or integration difficulties.
- Adverse changes in interest rate environments or general economic conditions.
- Changes in legislation or regulatory requirements.
Investor Verification Checklist
- Verify the final approval status of the merger by Hudson United and TD Banknorth shareholders.
- Confirm receipt of all requisite regulatory approvals for the merger of the banking subsidiaries.
- Monitor the actual closing stock price of TD Banknorth to determine the final variable cash/stock consideration value.
- Review the upcoming Form S-4 registration statement and joint proxy statement/prospectus for detailed transaction terms.
- Track TD Bank Financial Group's execution of share repurchases to maintain its ownership percentage in TD Banknorth.