Canada’s Toronto Dominion Bank (TD Bank) has signed a definitive agreement to acquire US-based investment banking company Cowen in an all-cash transaction worth $1.3bn.
Under the terms of the agreement, the Cowen shareholders are expected to receive $39 for each share of Cowen common stock held.
The transaction also includes the transition of Cowen’s 1,700 workforce, including its leadership team, to TD Securities.
Cowen’s chair and CEO Jeffrey Solomon will be added to the senior leadership of TD Securities, reporting to TD Securities president and CEO Riaz Ahmed.
Upon closing of the transaction, some parts of the combined company will be renamed TD Cowen, and operate as a division of TD Securities, under the leadership of Solomon.
Solomon said: “At Cowen, our success comes from striving to outperform in all we do by exceeding expectations and providing innovative solutions to, and partnering with, our clients.
“Taking this step will make us even stronger and more effective in serving their growing needs. The strategic decisions and focused investments that we have made over the last few years have positioned Cowen for this exciting next chapter of our growth.”
Riaz Ahmed said: “Together, we will have more than 6,500 professionals in 40 cities across the globe, extending our reach into new industry coverage areas and building even deeper, long-term client relationships.”
The transaction, which has been approved by the boards of directors of both companies, is expected to be completed in the first quarter of 2023.
Its closing is subject to customary closing conditions, including approvals from Cowen’s stockholders and approvals from the US, Canada, and other regulatory authorities.
Through the acquisition, TD Securities will benefit from Cowen’s diverse equity research franchise, to enhance its global market research capabilities.
Also, the company intends to use its balance sheet and expertise in capital markets to bring immediate benefits to Cowen’s existing client base.
TD Securities expects the combined company to generate around C$6.8bn ($5.2bn) in revenues, and achieve $300 to $350m in revenue synergies by the third year after closing.
To fund the transaction, the company has divested its shares representing around 13.4% to 12% stake in The Charles Schwab for around $1.9bn.
Perella Weinberg Partners served as a financial advisor and Simpson Thacher & Bartlett and Torys as legal advisors to TD Bank on the transaction.
Ardea Partners and Perkins Advisors served as financial advisors and Cravath, Swaine & Moore as legal advisor to Cowen.
TD Bank Group president and CEO Bharat Masrani said: “Cowen is a leading independent dealer with a premier U.S. equities business and a strong, diversified investment bank that, when combined with TD Securities, will allow us to accelerate our strategic U.S. growth plans.
“Most importantly, the acquisition will provide new capabilities and increased depth in key business lines to meet our clients’ needs and will allow us to leverage our combined expertise, talent, and integrated offerings across a much larger client base.”
