Cowen Chair and CEO Jeffrey Solomon will join the senior leadership of TD Securities, reporting to unit President and CEO Riaz Ahmed, and parts of the combined business will be known as TD Cowen, to be headed by Solomon.
“We will have added a world-class equity and research platform as well as widening our M&A and private-advisory capabilities in the various verticals,” Ahmed said on the conference call. “So I think we will have all the tools and capabilities that we need, and Jeff and I and our teams are really looking forward to crush it here.”
Perella Weinberg Partners served as financial adviser to Toronto-Dominion, and Ardea Partners and Perkins Advisors LLC advised Cowen.
Schwab Sale
To provide capital for the purchase, Toronto-Dominion sold 28.4 million non-voting common shares of Charles Schwab Corp. for about $1.9 billion, reducing its ownership stake in the company to about 12% from 13.4%. Toronto-Dominion said it “has no current intention to divest additional shares” in Charles Schwab. The Canadian bank would lose governance rights should its interest drop below 10%, Masrani said on the conference call.
Toronto-Dominion’s shares have underperformed those of two main Canadian peers with big US presences -- Royal Bank and Bank of Montreal -- amid doubts that it will be able to complete its takeover of Memphis, Tennessee-based First Horizon. Toronto-Dominion shares had slumped 14% this year through Friday, more than Royal Bank’s 7.2% decline and Bank of Montreal’s 6.3% drop, and the worst performance among Canada’s six largest banks.
“There has been quite a bit of underperformance for TD, and you can attribute the majority of that to what’s been happening on the regulatory front,” Stifel Financial Corp. analyst Mike Rizvanovic said in an interview before the Cowen deal was announced. “When you think about TD’s dynamic on where they make money and where they could deploy capital, if you’re on the wrong side of US regulators, it’s certainly not a good thing because it is such an important market for them.”
President Joe Biden signed an executive order in July 2021 -- seven months before Toronto-Dominion announced the First Horizon deal -- that urged regulators to more heavily scrutinize bank mergers as part of a broader push to increase competition in the country. In June, Senator Elizabeth Warren asked regulators to block the deal, citing concerns with the bank’s practices after the Capitol Forum reported that Toronto-Dominion wrongly pressured customers into opening certain accounts. Toronto-Dominion has said the allegations are “completely unfounded.”
Toronto-Dominion executives “have no reason to believe” the First Horizon takeover won’t be completed as planned, Masrani said Tuesday. “It’s proceeding at the pace we expected, and we are hoping that we can close it within the timeline we had stipulated.”
This article was provided by Bloomberg News.