Canadian T.D. Bank to spend US$1.3 billion for buying U.S. brokerage firm Cowen

T.D. Bank group has said that it will purchase Cowen Inc., a U.S. investment business, in an exclusive cash deal worth US$1.3 billion, or US $39 per share of Cowen common stock.

The big five banks claim that by purchasing a high-caliber, quickly expanding investment bank with great individuals and highly complementary goods and services, the deal will aid T.D. Securities, the bank's investment arm, to boost its long-term growth strategy in the United States.

After the settlement of the agreement, T.D. Securities' chairman and CEO, Jeffrey Solomon will advance to a senior position in the company's leadership group.


T.D. claims it has traded US$28.4 million in non-voting ordinary shares of The Charles Schwab Corporation for an estimated US$1.9 billion to raise the funding needed for the deal, lowering its shareholding from roughly 13.4 to 12.0 per cent.

The deal, which has received the approval of the boards of directors of T.D. and Cowen, is anticipated to close in the first quarter of 2023, subject to the usual closing requirements.

T.D. predicts that by the third year after the deal's closing, it will produce income synergies of US$300-350 million.

The second-largest bank in Canada is rectifying its fundamental weakness in the capital markets sector compared to bigger rivals like the Royal Bank of Canada by purchasing Cowen and assisting in protecting the firm from possible declines in its retail banking operations. Together with its previously disclosed US$13.4 billion purchase of First Horizon Corp., the agreement further extends Toronto-market Dominion's presence in the U.S.

About 11% of Toronto-based Dominion's 2021 revenue came from the company's wholesale banking segment. Comparatively, the capital markets division of Royal Bank contributed about 21 per cent of its income.

In 2020, a historic year for first public offerings, Cowen, which went public in 2006, saw its gross income rise 38 per cent year over year to US$289 million. According to the reports, it has participated in 55 IPOs over the last 12 months as a book runner, functioning as the principal consultant on five offerings.