TD Bank Buying Commerce Bancorp

MOUNT LAUREL, N.J. (AP) – Canada's TD Bank Financial Group said Tuesday it will acquire the Mid-Atlantic regional bank Commerce Bancorp Inc. for $8.5 billion in cash and stock.

The deal would double TD Bank's United States presence, adding Commerce's roughly 460 branches on the East Coast.

TD Bank, one of Canada's five largest banks, had about $404 billion in assets as of July 31. Commerce had about $48 billion in assets as of June 30.

TD Bank owns TD Waterhouse Canada and TD Waterhouse U.K., along with a stake in TD Ameritrade.

The deal would also mean New Jersey's largest homegrown bank would no longer be based in the state.

Terms call for a 75 percent stock and 25 percent cash transaction that values Commerce at $42 per share, a 7 premium over the stock's Monday closing price of $39.61.

Commerce Bancorp shares rose 29 cents to $39.90 in premarket trading Tuesday after climbing 4 percent earlier.

The banks said the deal would close in the spring of 2008 if regulators approve.

Some analysts said a sale became a possibility in June when Commerce's iconoclastic founder, Vernon W. Hill II, was forced out in a settlement with federal regulators.

During Hill's 34 years running Commerce, the bank grew almost from one office in the Philadelphia suburbs to a major player in banking on the East Coast. Commerce now has branches between New York City and Washington, and in Florida.

The growth came almost entirely through building new facilities — as opposed to buying existing banks. A major reason for that strategy is that Commerce has a different corporate culture from other banks and a business model that works more like a retailer than conventional banks.

Until now, the company has also resisted combinations with larger banks.

As part of the deal, TD Bank said it had agreed to negotiate to sell Commerce's insurance division back to its founder, George E. Norcross III, a fundraiser and powerbroker in Democratic Party politics in New Jersey.

Under terms of the deal, Commerce shareholders will receive 0.4142 shares of TD Bank common stock and $10.50 in cash for each share of Commerce.

Toronto-based TD Bank will take a one-time pretax restructuring charge of $490 million once the deal closes. The acquisition is expected to dilute 2008 earnings by 28 cents per share and 2009 earnings by 22 cents per share.