In an effort to expand its footprints in the U.S., The Toronto-Dominion Bank (TD) – also known as TD Bank – signed a definitive agreement to acquire Epoch Investment Partners, Inc. (EPHC), a fully owned subsidiary of Epoch Holding Corporation. The transaction is anticipated to close in the first half of 2013.
TD Bank will pay roughly $668 million in cash for the transaction. Further, the deal is still subject to the approval of Epoch’s shareholders along with the consent of the regulatory authorities. Subsequent to the completion of the deal, Epoch will continue working under its present brand name and operating structure.
Further, upon closure, the acquisition is anticipated to be accretive to the earnings of TD Bank in fiscal 2014 besides having a minimal impact on the earnings in fiscal 2013. Moreover, the company’s's Basel III Tier 1 common equity ratio is expected to decline by around 24 basis points from 8.2% as of October 31, 2012. Further, the acquisition will considerably strengthen the U.S.-based wealth management unit of TD Bank and significantly widen the variety of product it offers to institutional and retail clients in Canada.
With over 20 years of expertise in investment management, Epoch is one of the highly successful asset management firms in the U.S. Management at TD Bank believes that this deal will provide both the firms an excellent opportunity to serve the clients in a more efficient manner.
Epoch, on its part, was delighted to join TD Bank, whose financial stability will boost the former’s competitive edge. Further, the deal will combine Epoch's U.S. and global equities expertise with TD Bank's client-centric approach for their mutual improvement.
We expect TD Bank to benefit from the strategic acquisition of Epoch thereby posting growth in core earnings going forward. The acquisition is also expected to be accretive to the revenue of the company’s Wealth and Insurance segment.
Currently, TD Bank retains a Zacks #4 Rank, which translates into a short-term Sell rating. However, we believe that the aforesaid acquisition will likely lead to an improvement in efficiency and add to its competitive edge. These factors may ultimately result in upward estimate revisions, thereby resulting in an improved Zacks Rank.