TD Bank Buying Commerce Bancorp for $8.5B US

The rise of the Canadian dollar compared to the United States opened a great opportunity for the TD Bank Financial Group to make a move expanding across the border. They bought the Commerce Bancorp Inc. for $8.5 billion US. The company has over 460 branches and over 15,000 employees. TD Banknorth in New England is already owned by TD. This will be their second major acquisition outside of the nation. The acquisition of the Commerce Bancorp Inc. makes it the seventh largest bank in North America expanding the network to 2,000 branches. The contract will be officially agreed upon during next year March or April.

The acquisition made by TD Bank relates to quite a lot of things in Chapter 1. Opportunity cost is an important factor. $8.5 billion US is a lot of money which TD can invest in a variety of different areas yielding different results. Also, they sacrifice a lot of time in order to make this transaction possible. It isn’t something that is decided in a day, but something that takes several weeks or even months. The opportunity cost in this is that they can spend the time on other projects. TD Bank is a company of services; they require labour resource in order to function and with the acquisition of Commerce, they are going to acquire 15,000 more employees to help them be successful.

I think TD is making a good decision in expanding their branches across the nation. The easy accessibility of the banks may attract more people; for vacationers to travel anywhere across North America to easily withdraw money when required. It’s really misfortunate to have a lack of money during a road trip, but with TD Bank’s widespread it’s way easier. Not to mention that people won’t have to carry all of the cash with them. Overall, I think it was a good decision that has been carefully analyzed or else they wouldn’t have made the deal in the first place. In the future they will probably benefit greatly from this acquisition.

http://www.cbc.ca/money/story/2007/10/02/tdbankcommerce.html