Commerce Bancorp ( CBH) rose 4% after the New Jersey bank chain agreed to be bought out by Canada's TD Bank ( TD) for $8.5 billion in stock and cash, or $42 a share.
Commerce shareholders will receive 0.4142 shares of a TD common share and $10.50 in cash in exchange for each common share of Commerce Bancorp. TD said the purchase will "turbocharge our organic growth strategy" and boost its presence in the Mid-Atlantic region. TD Bank expects the deal to be dilutive to earnings in 2008 and 2009 and to result in a $490 million restructuring charge. Commerce intends to sell a portion of its fixed-rate investment securities portfolio and reinvest in short term or floating rate AAA-rated securities. Commerce presently anticipates that it will record an after-tax charge of approximately $150 million in the third quarter related to these actions. In addition, Commerce has agreed to negotiate the sale of Commerce Banc Insurance Services to George E. Norcross III, CEO of the unit and a director of the Commerce board. Commerce rose $1.46 to $41.20.