TD Bank to buy Banknorth Group

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TD Bank to buy Banknorth Group

Wed, 08/25/2004 - 8:00pm -- tim

TD Bank Financial Group to Become Majority Shareholder of
Banknorth Group, Inc.
Strategic acquisition provides TD with personal and commercial
banking growth opportunity in the US
Banknorth gains partner to expand its community-based banking model
PORTLAND, Maine--Aug. 26, 2004--Banknorth Group, Inc. (NYSE: BNK) and
TD
Bank Financial Group (TDBFG) today announced that they have signed a
definitive agreement for TDBFG to acquire 51% of the outstanding shares of
Banknorth for approximately US$3.8 billion (approximately CDN$5 billion)
in cash and TD common shares. This acquisition will provide TD with the
majority interest in a growth company that has a proven track record of
making strategic acquisitions.
"This strategic acquisition provides us with an expanding beachhead in
the Northeastern United States and an outstanding personal and commercial
banking complement to our strong U.S. wealth management franchise," said
Ed Clark, TD Bank Financial Group President and Chief Executive Officer.
"The addition of Banknorth to our brand provides us with immediately
accretive earnings and a majority interest in a company that has an
excellent management team focused on growing their business both
organically and through smart and profitable acquisitions."
"Having TDBFG as our majority shareholder offers us the depth to
continue with our strategy of acquiring high potential banks in strategic
locations and positions us to move to the next level in terms of size and
product capability," said William J. Ryan, Banknorth's Chairman, President
and Chief Executive Officer. "Both TD and Banknorth are leaders in
employing a customer-focused approach to their markets and bring proven
track records of successfully integrating acquisitions. I firmly believe
that working with TD will be a positive experience for our shareholders,
our customers and our employees."
Acquisition Details
The agreement between TDBFG and Banknorth provides for the merger of
Banknorth with a TD subsidiary in which each Banknorth shareholder will
receive a package of US$12.24 in cash, 0.2351 of a TD common share and
0.49 shares of the new Banknorth stock, which will continue to be listed
on the New York Stock Exchange. TD will be permitted to buy additional
Banknorth shares up to a limit of 66 2/3% either in the open market or in
specific circumstances directly from Banknorth, such as if Banknorth were
looking to raise capital.
The transaction will be taxable for Banknorth shareholders for U.S.
federal income tax purposes with respect to the cash and TD shares they
receive. The new Banknorth shares will be tax free.
The agreement also permits TD to bid for the remaining publicly held
shares in subsequent years, subject to certain limitations in the first
two years, approval by a majority of designated independent directors and
unaffiliated Banknorth shareholders during the first five years and
approval by a majority of designated independent directors or unaffiliated
Banknorth shareholders after five years. The deal, which is subject to
approval by Banknorth's shareholders and by U.S. and Canadian regulatory
authorities, is expected to close in February, 2005 and be immediately
accretive to TD's earnings, without reliance on synergies.
"We have structured the deal this way to allow the maximum degree of
flexibility for both TD and Banknorth. TD gains an important personal and
commercial footprint in the U.S. while maintaining our strong capital
ratios," said Clark.
"From our perspective, we are gaining access to capital and additional
flexibility to allow us to continue to participate in larger
acquisitions," added Ryan.
Bill Ryan will remain Chairman, President and CEO of Banknorth and
will
join TD's Board of Directors upon the conclusion of the deal. He will
continue to be based at Banknorth's headquarters in Portland, Maine.
Banknorth's experienced management team was an integral component of the
deal and will remain intact.
To maintain the Banknorth board's effective working size, but at the
same time reflect the interests of the majority shareholder, TD will
initially be adding up to five members to the board in addition to the
current 14 Banknorth directors, all of whom are expected to remain on the
board following the closing. A majority of both the full board and the
directors appointed by TD will be required for any motion put before the
Board to reflect TDBFG's majority shareholder position. TD will have the
right to elect a majority of board members generally as long as it remains
a majority shareholder.
Maintaining Community Roots
"Banknorth has a long standing reputation of being committed to the
communities in which it operates and we intend to continue with that same
approach," said Ryan. "We are pleased that our two organizations have the
same focus on meeting the needs of our customers in the local markets we
serve. We think that there is a good cultural fit between the two banks,"
added Clark.
TD Bank Financial Group and Banknorth will hold an analyst conference
call and meeting today, August 26th, 2004 at 8:45 a.m. ET to discuss the
details of the transaction. The call will feature a presentation by Ed
Clark, President and CEO of TD Bank Financial Group and Bill Ryan,
Chairman, President and CEO of Banknorth. A question and answer period for
pre-qualified analysts and investors will follow the formal presentation.
The call will be webcast live via TD's website at www.td.com/investor as
well as the investor relations section of Banknorth's website at
www.banknorth.com. Pre-qualified analysts and investors may access the
call by calling 416-640-1907 or toll free at 1-800-814-4860. Media may
also access the call at those numbers, but in listen-only mode. Recordings
of the presentation will be archived on TD's website www.td.com following
the webcast and will be available for replay for a period of at least one
month. The replay of the webcast will also be accessible from the investor
relations section of Banknorth's website at www.banknorth.com.
Banknorth Key Facts & Figures
A New England-based company recognized by Forbes magazine as the best
managed bank in America, Banknorth offers personal and commercial banking,
insurance, investment planning and wealth management services. The
operations of Banknorth include:
-- 389 branches and 548 Automated Teller Machines (ATMs) in 6
states
-- 1.3 million households served
-- US $29.3 billion in assets, as of June 30, 2004
-- US $19.3 billion in deposits, as of June 30, 2004
Banknorth is first in combined market share in Maine, New Hampshire
and
Vermont, and 5th in Massachusetts and 6th in Connecticut.
About TD Bank Financial Group
The Toronto-Dominion Bank and its subsidiaries are collectively known
as
TD Bank Financial Group. In Canada and around the world, TD Bank Financial
Group serves more than 13 million customers in three key businesses:
personal and commercial banking including TD Canada Trust; wealth
management including the global operations of TD Waterhouse; and wholesale
banking, including TD Securities, operating in a number of locations in
key financial centres around the globe. TD Bank Financial Group also ranks
among the world's leading on-line financial services firms, with more than
4.5 million on-line customers. TD Bank Financial Group had CDN$312 billion
in assets, as of April 30, 2004. The Toronto-Dominion Bank trades on the
Toronto and New York Stock Exchanges under the symbol "TD".
About Banknorth
At June 30, 2004, Banknorth Group, Inc. headquartered in Portland,
Maine
and one of the 30 largest publicly-traded commercial banks in the country,
had $29.3 billion in assets. Banknorth's banking subsidiary, Banknorth,
N.A., operates banking divisions in Connecticut (Banknorth Connecticut);
Maine (Peoples Heritage Bank); Massachusetts (Banknorth Massachusetts);
New Hampshire (Bank of New Hampshire); New York (Evergreen Bank); and
Vermont (Banknorth Vermont). The Company and Banknorth, N.A. also operate
subsidiaries and divisions in insurance, money management, merchant
services, mortgage banking, government banking and other financial
services and offer investment products in association with PrimeVest
Financial Services, Inc. The Company's website is at www.banknorth.com.
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements relating to
anticipated financial and operating results, the companies' plans,
objectives, expectations and intentions and other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "will," "should," "may," "and other similar expression. Such
statements are based upon the current beliefs and expectations of TD Bank
Financial Group's and Banknorth Group, Inc.'s management and involve a
number of significant risks and uncertainties. Actual results may differ
materially from the results anticipated in these forward-looking
statements. The following factors, among others, could cause or contribute
to such materially differences: change in general economic conditions; the
performance of financial markets and interest rates; the ability to obtain
governmental approvals of the transaction on the proposed terms and
schedule; the failure of Banknorth Group, Inc.'s shareholders to approve
the transaction; disruption from the transaction making it more difficult
to maintain relationships with clients, employees or suppliers; increased
competition and its effect on pricing, spending, third-party relationships
and revenues; the risk of new and changing regulation in the U.S. and
Canada; acts of terrorism; and war or political instability. Additional
factors that could cause TD Bank Financial Group's and Banknorth Group,
Inc.'s results to differ materially from those described in the
forward-looking statements can be found in the 2003 Annual Report on Form
40-F for TD Bank Financial Group and the 2003 Annual Report on Form 10-K
of Banknorth Group, Inc. filed with the Securities and Exchange Commission
and available at the Securities and Exchange Commission's Internet site
(http://www.sec.gov ).
This communication is being made in respect of the proposed merger
transactions involving the acquisition by TD Bank Financial Group of 51%
of the outstanding common stock of Banknorth Group, Inc. In connection
with the proposed transactions, a combined registration statement on Form
F-4 and S-4 containing a proxy statement/prospectus will be filed with the
Securities and Exchange Commission. Shareholders of Banknorth Group, Inc.
are urged to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available, because it will contain important
information. Shareholders will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing information
about TD Bank Financial Group and Banknorth Group, Inc., without charge,
at the Securities and Exchange Commission's Internet site
(http://www.sec.gov ). Copies of the proxy
statement/prospectus and the filings with the Securities and Exchange
Commission that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, without charge, by directing a
request to TD Bank Financial Group 66 Wellington Street West, Toronto, ON
M5K 1A2,
Attention: Investor Relations 416-982-5075 or to Banknorth Group, Inc.,
Attention: Investor Relations 207-761-8517.
TD Bank Financial Group, Banknorth Group, Inc. and their respective
directors and executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the proposed
transaction. Information regarding TD Bank Financial Group's directors and
executive officers is available in its Annual Report on Form 40-F for the
year ended October 31, 2003, which was filed with the Securities and
Exchange Commission on December 15, 2003, and its notice of annual meeting
and proxy circular for its 2004 annual meeting, which was filed with the
Securities and Exchange Commission on February 17, 2004, and information
regarding Banknorth Group, Inc.'s directors and executive officers is
available in Banknorth's proxy statement, which was filed with the
Securities and Exchange Commission on March 17, 2004. Other information
regarding the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement/prospectus and other relevant
materials to be filed with the Securities and Exchange Commission when
they become available.