By Sam Boughedda
First Horizon National (NYSE:FHN) shares plunged Wednesday after it disclosed that Toronto-Dominion Bank (TSX:TD) $13.4 billion acquisition of the company is unlikely to close by May 27.
FHN shares slumped more than 10% following the news.
On February 9, the companies agreed to extend the acquisition completion date to May 27. However, in a filing on Wednesday, FHN said that TD recently informed them it does not expect to have the necessary regulatory approvals in time to complete the acquisition by May 27, 2023, and that it "cannot provide a new projected closing date at this time."
The companies are now in discussions regarding a potential further extension, but they stated that "there can be no assurance that an extension will ultimately be agreed or that TD will satisfy all regulatory requirements so that the regulatory approvals required" to complete the takeover will be received.
Bloomberg reported that Toronto-Dominion told them in an emailed statement that it "remains committed to the transaction" but is unable to comment further until it reports fiscal first-quarter results Thursday.
Reacting to the news, Evercore ISI analysts said in a research note that the timing of the change in tone is notable and poses a risk.
"While we have yet to hear back from mgmt, we acknowledge that the removal of the outside May 27, 2023, close date only a few weeks after the banks provided the updated date is concerning. In short, we cannot rule out that the short turnaround in language could indicate a recent regulatory development on the TD front – thereby influencing the change," wrote the analysts.
However, they added that "an eventual close of the deal (albeit delayed) remains a solid possibility, in our view."