First Horizon National Corporation (FHN)

[Enterprising Investor]

TD Bank Group would have paid at least $25 for each share of First Horizon.

If the deal did not close by 11/28/22, shareholders would have received an additional $0.65 per share ticking fee on an annualized basis from 11/27/22 through the day immediately prior to closing.

FHN closed at $18.25 on 2/25/22. It closed at $23.50 when the deal was announced on 2/28/22.

That was then. This is now.

Although shareholders (and later, the arbs, who bought shares once the deal was announced) never got their $25 per share, FHN has benefited nicely. TD not only paid FHN a $200 million break-up fee and $25 million for fee reimbursements, it also invested about $493.6 million in Series G Perpetual Convertible Preferred Stock with a conversion price of $25 per share. The dividend rate is equal to the one paid on common stock, currently $0.60 per share annually, which equates to a 2.4% yield. Cheap.

The breakup fee and any savings from reimbursements, if any, net of taxes are immediate, permanent source of capital. The Series G preferred stock will most likely be a long term source of capital.

I expect FHN to trading around $15 within the next six months to a year.