Toronto-Dominion Bank TD-T and First Horizon Corp. FHN-N have agreed to delay the termination date for their pending US$13.4-billion deal as they continue to work through regulatory approvals.
The banks said Thursday evening that they have mutually agreed to extend the date after which both banks can walk away from TD’s pending purchase of the Tennessee-based lender to May 27 from Feb. 27.
U.S. regulators have become more critical of bank mergers in recent years. The heightened scrutiny of combinations in the sector has weighed on deal deadlines as some of Canada’s largest lenders expand further into the U.S. market.
In December, TD deferred its closing timeline from the first fiscal quarter to the first half of its 2023 fiscal year. The bank also missed a Nov. 27 deadline, after which TD must pay First Horizon a premium equal to 5.4 cents a share each month until the deal closes. That means the bank is paying about US$29-million each month for a total of approximately US$145-million if the deal closes by April 30.
Bank of Montreal also previously changed its expected closing date to buy California-based Bank of the West to the first quarter of this year from the end of 2022. The deal closed on Feb. 1 after receiving approval from U.S. regulators in January.
To help clinch the deal and ease regulator and stakeholder concerns, BMO committed US$40-billion to underserved communities, largely focused near Bank of the West’s operations in California.
TD said that it is continuing to negotiate with stakeholder groups on its community commitments.
“TD and First Horizon are fully committed to the merger and continue to make significant progress in planning for the closing and the integration of the companies,” the banks said in a statement. “Progress is being made on a Community Benefits Plan in support of local communities across the TD and First Horizon footprints in the U.S.”