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Toronto-Dominion Bank to Acquire Cowen Inc for $1.3 Billion

Industry: Retail Banking and Lending
Current: Company Performance

Toronto-Dominion Bank agrees to buy investment bank Cowen Inc for $1.3 billion
The acquisition would give Toronto-Dominion Bank a larger presence in investment banking, and in the US, where it has been expanding
Shares of Cowen Inc rose 20% in less than half an hour after markets opened on August 2, 2022, to a valuation of $805 million

On August 2, 2022, Toronto-Dominion Bank (TD Bank) announced that it reached an agreement to acquire Cowen Inc. (Cowen), a financial services company with headquarters in New York, in an all-cash deal valued at $1.3 billion. Cowen’s investment bank and other complementary offerings will help TD Bank advance its expansion plans in the US. The Toronto-based bank will exchange $39 for each share of common stock in Cowen Inc.

Toronto-Dominion Bank Overview

The Toronto-Dominion Bank provides retail and corporate banking, wealth management, and related financial solutions. The bank provides accounts, cards, certificates of deposits, life and non-life insurance, mortgages, loans, merchant solutions, investments, cash management, and wealth advisory services. It also provides foreign banking services. The bank conducts business throughout Southeast Asia, Europe, the Caribbean, and North America. TD Bank is headquartered in Toronto, Ontario, Canada.

Cowen Inc Overview

Previously known as Cowen Group, Inc., Cowen Inc. is a diversified financial organization. Cowen, along with its subsidiaries, provides investment banking services such as sales and trading, research, worldwide clearing, prime brokerage, commission management services, and M&A advising. It has offices in the US, the UK, Germany, Malta, Ireland, Switzerland, Hong Kong, and Luxembourg. Cowen is headquartered in New York, the US.

Deal Rationale

Cowen’s complementary and extremely diverse equity research franchise is ranked among the top 10 research platforms in the US by both stocks under coverage and the number of publishing analysts. Hence, following the closing of the transaction, Cowen’s equity research franchise will likely benefit from the current depth and breadth of the global market research capabilities of TD Securities. Cowen’s franchise also includes substantial expertise in research in the areas of environmental, social, and governance (ESG). Cowen’s current clientele is expected to gain right away from the expertise of TD Securities in capital markets and balance sheets. On a fully synergized run-rate basis, the deal is expected to deliver 14% adjusted ROIC and be “modestly accretive” to TD’s estimated 2023 adjusted EPS. TD Bank expects to achieve $300M-$350M in revenue synergy by the third year. It also expects pretax integration and retention costs of $450M over three years.

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