The Toronto-Dominion Bank (TD) is to acquire Greystone Capital Management Inc (GCMI), the parent company of Greystone Managed Investments Inc, for USD792 million, subject to certain adjustments.
The net purchase price comprises USD730 million of enterprise value, seed capital of approximately USD105 million and certain other net adjustments. Under the proposed transaction, shareholders of GCMI will receive 30 per cent of the net purchase price in TD common shares with the remaining balance payable in cash consideration. GCMI shareholders will have the ability to elect up to an incremental 20 per cent of the net purchase price in TD common shares, for a maximum of 50 per cent TD share consideration.
With the addition of Greystone’s diversified portfolio, TD Asset Management (“TDAM”) will become the largest money manager in Canadai.
“At TD Wealth, we continually look for opportunities to strategically grow our North American business to offer clients a superior wealth management experience,” says Leo Salom (pictured), Group Head, Wealth Management and TD Insurance, TD Bank Group. “Greystone’s leadership in alternative investments is a perfect complement to TDAM’s traditional investment products. Their robust suite of proven alternative and traditional investment solutions, combined with the scope and strength of TD’s existing offerings, will provide clients with compelling solutions to enhance their current portfolios.”
Founded in 1988 and headquartered in Regina, Saskatchewan, Greystone is a privately-owned institutional asset manager with nearly 200 employees and a proven track record of strong investment performance. Providing multi-asset class investment capabilities, Greystone integrates traditional and alternative investment solutions, with a specialty in real estate investments. The firm has received numerous culture awards, continually provides strong value for its clients, and is highly regarded in the investment community.
“Joining forces with TD will add tremendous value to Greystone clients interested in expanding and diversifying their investment portfolios,” said Robert Vanderhooft, Chief Executive Officer and Chief Investment Officer of Greystone. “TD’s core values, combined with its progressive employee culture and long-term investment philosophies are in perfect alignment with Greystone. We look forward to joining such a well-respected organization.”
With this transaction, TD will add Greystone’s USD36 billion in assets under management to their existing USD357 billion under management, bringing the pro forma total to approximately USD393 billion assets under management at TD. Following the completion of the transaction, Greystone will operate and serve clients under the name TD Greystone Asset Management while continuing to operate out of Regina, Saskatchewan.
“This acquisition is an exciting step for TD Asset Management. Greystone’s high quality team will bring its strengths in fixed income, equities and real asset investing to TD and will provide our institutional business with an enhanced set of capabilities,” says Bruce Cooper, CEO and CIO, TD Asset Management. “The compatible cultures and investment philosophies shared by TD and Greystone will allow our organizations to build on existing strengths, broaden our expertise, and offer better, more comprehensive investment solutions for our collective clients, including the opportunity to work together to launch a global real estate fund.”
TD’s purchase of GCMI is subject to the receipt of regulatory approvals and satisfaction of other customary closing conditions, and is expected to close in the second half of 2018.
The proposed transaction is expected to reduce TD’s CET1 on close by less than 10 basis points. Approximately USD170 million of the TD common shares issued to employee shareholders in respect of the purchase price will be escrowed for two years, subject to continued employment, and charged to earnings over the first two years after closing. Including these charges and other one-time items, which are expected to be reported as items of note, this transaction is expected to be accretive to reported EPS by year three and accretive to adjusted EPS in year one. TD expects to recognise goodwill and intangibles of approximately USD550 million on the transaction.