TD Waterhouse To Go Private Under TD Bank

by Carla Johnson, Investors Offshore.com

17 October 2001

The Canada-based Toronto Dominion Bank (TD Bank) Financial Group has announced that it intends to take its majority-owned discount brokerage, TD Waterhouse, private and has made a cash offer of US$9 per share in a bid to acquire the 12 per cent of outstanding shares that it does not already own. Two years ago investors bought the very same shares for US$24 each and as TD Bank is buying back at a profit of US$15 it is on course to actually purchase the remainder of TD Waterhouse for nothing and make a profit of about US$97 million.

In a statement released by the Group this week, TD Bank said that the operating business environment has changed considerably since the initial public offering of TD Waterhouse Group in 1999. 'TD Waterhouse will continue to be an integral component to TD's overall strategy, and in particular to TD's retail financial services strategy outside Canada,' explained the statement. 'Increasingly, the integration of financial services - in brokerage and banking - is what customers are looking for. TD Bank expects that having TD Waterhouse as a wholly owned subsidiary will both maximize simplicity in TD Bank's and TD Waterhouse's operations and provide the operating flexibility to enable TD Bank to meet customer needs.'

Based on analysts' estimates of TD Waterhouse's projected earnings for fiscal 2002, the tender offer is expected to be approximately '1% dilutive to TD Bank's 2002 earnings.' The Bank stresses that it will be business as usual for TD Waterhouse's customers around the world as a result of this transaction.

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