The Toronto-based bank is paying $32.33 for each share of TD Banknorth it didn't already own. TD Bank, also known as Toronto-Dominion, owns about 57% of TD Banknorth's shares.
The deal represents a 6.5% premium over TD Banknorth's Friday close of $30.35.
"This transaction offers TD Banknorth shareholders an opportunity to realize fair value for their shares, while also offering TD Bank Financial Group shareholders the long-term benefits of 100% ownership of a US banking business in an attractive marketplace," said TD Bank CEO and President Ed Clark.
In premarket trading shares are up $1.55, or 5%, to $31.90.