Strong Canadian Dollar Drives Acquisition of US Companies

October 2, 2007

Toronto Dominion, Canada’s third largest bank announced this morning that they have agreed to buy Commerce Bancorp Inc for $8.5 billion. Commerce Bank has built a name for itself here in the US by keeping their doors open late on the weekends for all customers. The simple concept has helped the company expand at a rapid pace throughout New England and the Northeast.

The deal is 75 percent stock and 25 percent cash.

If TD engaged in the transaction 6 months ago when USD/CAD was trading at 1.16, the deal would have cost 1.3B more Canadian dollars or a premium of 14 percent.

This just goes to show the impact of currency fluctuations on cross border merger and acquisitions. Expect this trend to continue as Canadians spend their new found wealth!

Posted in Canadian Dollar, Commerce Bank, Toronto Dominion, USD/CAD