Canadian bank seeks majority share of Banknorth
If all goes as planned, bank branches around New England will be sporting signs reading “TD Banknorth” by next spring.
Under an agreement reached Aug. 26, Canada’s TD Bank Financial Group says it will acquire a 51 percent stake in Banknorth Group Inc., the largest independent bank in New England and parent company of Bank of New Hampshire.
The $3.8 billion deal will give Banknorth of Portland, Maine, the cash officers say they need to finance future acquisitions while still maintaining most of its autonomy. A combined TD Bank and Banknorth could ultimately become one of the top 20 banks in the United States, the companies say.
The deal, which is subject to shareholder and regulatory approval, is expected to close in February, officials said.
Under terms of the agreement, Banknorth will become a TD Bank subsidiary. Each Banknorth shareholder will receive a package that includes cash and stock. The new Banknorth stock will continue to be listed on the New York Stock Exchange.
TD will initially add five members to Banknorth’s 14-member board of directors. It ultimately will get the right to appoint a majority of the board.
Banknorth has 389 branches and 548 automated teller machines in six states. It had $29.3 billion in assets as of June 2004, and $19.3 billion in deposits. Toronto-Dominion Bank and its subsidiaries — collectively known as TD Bank Financial Group — have assets of nearly $240 billion and 1,000 branches across Canada.
Banknorth CEO William J. Ryan will remain in that post if the deal goes through, and the rest of his leadership team will remain as well.
Ryan also said that Banknorth will keep its headquarters in Portland and that there will be no layoffs.
“From our perspective, we are gaining access to capital and additional flexibility to allow us to continue to participate in larger acquisitions,” Ryan said.
TD has made previous attempts to enter the U.S. market. Last year, it was in talks to merge its TD Waterhouse brokerage with online broker ETrade Financial Corp. Those talks were called off in January.
Canadian banks are interested in the U.S. market because there are relatively few banks — and therefore few merger opportunities — in Canada, said James Ackor, director of equity research at RBC Capital Markets.
In recent years, Banknorth has acquired a number of small community banks, primarily in Massachusetts and Connecticut. After Bank of America’s takeover of FleetBoston Financial earlier this year, Banknorth became the largest banking company with headquarters in New England.
Besides Bank of New Hampshire, Banknorth Group’s banking subsidiaries include Peoples Heritage in Maine, Banknorth Massachusetts, Banknorth Vermont, Banknorth Connecticut and Evergreen Bank in upstate New York.
TD is Canada’s third-largest bank and operates the TD Waterhouse brokerages in the United States. nhbr