The Toronto-Dominion Bank (TD - Free Report) closed the acquisition of Greystone Capital Management Inc. The net purchase price of the deal, which was announced in July, is $792 million.
Greystone Capital Management is the parent company of Greystone Managed Investments Inc. Being a privately owned institutional asset manager, the company has nearly 200 employees and provides multi-asset class investment capabilities.
At the time of the announcement of the deal, the group head of Wealth Management and TD Insurance of TD Bank Group, Leo Salom stated, “At TD Wealth, we continually look for opportunities to strategically grow our North American business to offer clients a superior wealth management experience. Greystone's leadership in alternative investments is a perfect complement to TDAM's traditional investment products. Their robust suite of proven alternative and traditional investment solutions, combined with the scope and strength of TD's existing offerings, will provide clients with compelling solutions to enhance their current portfolios.”
Thus, with this acquisition of Greystone, TD Asset Management has become the largest money manager in Canada.
Notably, the total deal value includes $730 million of enterprise value, $105 million of seed capital and certain other net adjustments. At the time of the announcement of the deal, it was decided that shareholders of Greystone will receive 30% of net purchase price in TD Bank common shares and the balance in cash.
The deal is projected to lower TD Bank's CET1 by less than 10 basis points. Moreover, nearly $170 million of TD Bank shares, which were issued to employee shareholders in respect of the purchase price, will be escrowed for two years, subject to continued employment. It will then be charged to earnings over the first two years.
Further, including the above-mentioned charges and some other one-time items, the deal is projected to be accretive to reported earnings per share (EPS) by the third year and accretive to adjusted EPS in the first year.
Following the acquisition, Greystone's $36 billion of assets under management were added to TD Bank’s existing $357 billion.
Now, Greystone will operate as TD Greystone Asset Management, with offices in Regina, Winnipeg, Toronto and Hong Kong.
Shares of TD Bank have lost 3.4% over the past year compared with 11.2% decline recorded by the industry.
The stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A few better-ranked stocks from the finance space are Citigroup Inc. (C - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and U.S. Bancorp (USB - Free Report) . Each of these companies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, Citigroup has witnessed an upward earnings estimate revision of 1.7% for the current year. Its shares have gained more than 30% over the past two years.
Over the past 60 days, JPMorgan’s earnings estimates have been revised 1.3% upward for the current year. Shares of the company have gained more than 50% over the past two years.
U.S. Bancorp’s share price has increased nearly 15% in the past two years. Its earnings estimates for 2018 have been marginally revised upward, over the past 60 days.
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