E-commerce and Online Business Reference

An acquisition occurs when one company is bought by another. The acquisition can be friendly or hostile. A friendly acquisition occurs when the target company agrees to being bought. A hostile acquisition occurs when the target company does not want to be bought and fights the other company. A friendly acquisition has many of the same attributes as a merger. A merger combines two companies, usually in the same industry, to form a bigger and better company. Mergers occur in a friendly setting where executives from the respective companies work together to ensure a successful combination of all parts. Mergers and acquisitions take place when one or two companies want to expand quickly without having to build new branches from the ground up or there are two companies in the same field that are struggling to stay a float. They create one large company helping the two businesses strive in the industry.

Recently, Commerce Bancorp accepted an acquisition proposal from Canada based Toronto-Dominion Bank Financial Group. The proposal was made shortly after Vernon Hill, the founder of Commerce Bancorp resigned. TD Financial Group is acquiring Commerce Bancorp for $8.5 billion in a transaction that will consist of 75% stock and 25% cash. TD plans to take the best elements of both companies and combine them to make a North American powerhouse. The combination of TD and Commerce more than doubles the amount of branches TD has in the United States as they look to become a leading North American financial institution. The acquisition will bring the deposit amount to one third of a trillion dollars, making it the first bank of that size in both the U.S. and Canadian markets. TD will also be acquiring all of Commerce Bancorp shares at $42 per share. The Commerce stock has not traded over $40 per share in over a year. TD is planning on keeping most of Commerce’s employees and all of their branches. They will also be combining their names. TD Banknorth and Commerce Bancorp will now be known as “TD Commerce Bank, America’s Most Convenient Bank,” this is in recognition of Commerce’s huge success and loyal customer base. This is how a friendly acquisition can look more like a merger than an acquisition. TD is acknowledging Commerce’s success in the United States and wants to expand it rather then change it.

There are many cost savings and benefits to be found in the acquisition of Commerce Bancorp by TD Bank Financial Group.

Cost Savings for TD Bank Financial Group:

• TD acquired about 450 branches already built. Bringing the total number of branches to 2,100; making TD Commerce Bank the seventh largest bank by number of branches in North America.

• TD increases the amount of their deposits by about $46 billion without having to do any lobbying or marketing.

• TD gains about 16,000 Commerce employees. All of them are already trained and have experience working in the banking industry.

• TD also gains all of Commerce’s three million current customers without having to put forth money for advertising. This brings their total number of customers to about seventeen million.

• TD customers gain access to more then 450 ATMs and have easier access to their money if they are in the United States.

Cost Benefits for Commerce Bancorp:

• Commerce increases their number of branches by about 1,650. Automatically making them North America’s seventh largest bank by number of branches, without having to spend a dime.

• Commerce also increases the number of employees and customers they have without having to put any money out.

• Commerce customers get a new line of accounts to chose from. They also gain access to more then 750 ATMs and will have easier access to their money if they are in Canada.

• Commerce receives $8.5 billion in cash and stocks.

• Commerce’s Financial Markets sector will become part of TD’s, which is known worldwide for providing superior financial products and services.

Through this acquisition TD Financial Group is planning for the future. They are investing in an established and accomplished bank, which they believe is key to achieving long-term growth. It will also help Commerce reach its goals faster and benefit both TD Bank Financial Group and Commerce Bancorp. Both financial institutions have similar values and both believe the customer comes first, which is why the combination of the two will bring about undeniable success. Commerce will continue to WOW! their customers and now TD customers will be able to experience the same service that made Commerce Bancorp a success story.

Amanda Taylor

West Chester University