TD Bank Financial Group and New Jersey-based Commerce Bancorp Inc. say they have signed a definitive agreement for TD to acquire Commerce Bank in a 75% stock and 25% cash transaction valued at US$8.5 billion.

“The combination of Commerce with TD Banknorth doubles the scale of our U.S. banking business and accelerates our transformation to a leading North American financial institution,” said Ed Clark, president and CEO, TD Bank Financial Group, in a release. “Commerce brings an impressive geographic footprint and market share in a contiguous region and a complementary North American retail banking business model.”

The addition of Commerce Bank gives TD Bank Financial Group more than 2,000 branches in North America and approximately one-quarter of a trillion dollars in deposits, making it the first bank with critical mass in both the Canadian and U.S. markets, TD says.

After completion of the deal, TD Bank Financial Group will become the seventh largest bank in North America as measured by branch locations, TD says.

Under the agreement, Commerce shareholders will receive 0.4142 shares of a TD common share and US$10.50 in cash in exchange for each common share of Commerce Bancorp Inc. The consideration was negotiated on the basis of US$42.00 per share value for Commerce Bank. The transaction value based on the October 1, closing price of TD common shares is $42.37.

Following the completion of the transaction, TD expects to take a one time restructuring charge of approximately US$490 million pre-tax.

The deal is expected to close in March or April 2008 subject to approvals from Commerce shareholders and U.S. and Canadian regulatory authorities.

Dennis DiFlorio, chairman of Commerce Bank, and Bob Falese, president and CEO, will continue to be responsible for running Commerce, based at its headquarters in Cherry Hill, New Jersey and will report to Bharat Masrani, president and CEO, TD Banknorth upon the conclusion of the transaction.

“Commerce gives us scale in the Mid-Atlantic and will allow us to turbocharge our organic growth strategy,” said Masrani.

The operations of Commerce Bank include:

  • nearly 460 locations and close to 700 Automated Teller Machines (ATMs) throughout New Jersey, New York, Connecticut, Pennsylvania, Delaware, Washington, DC, Virginia, Maryland and Southeast Florida;
  • 2.4 million customers;
  • US $48 billion in assets as of June 30, 2007;
  • US $44 billion in deposits as of June 30, 2007; and
  • more than 15,000 employees.