TD buys investment bank Cowen for $39 a share by selling down Schwab stake

TD Bank Group TD,
-0.69%
TD,
+1.35%
said Tuesday it’ll buy investment bank Cowen Inc. COWN,
+1.20%
for $1.3 billion, or $39 a share, a premium of about 10% over its closing price of $35.49 a share on Monday and a purchase price multiple of 8.1 times Cowen’s estimated 2023 earnings. Cowen shares jumped 8% in premarket trades on the news. “Through this transaction, TD Securities will accelerate its long-term growth strategy in the United States by acquiring a high-quality and rapidly growing investment bank with outstanding talent (1,700 employees) and highly complementary products and services. TD said it sold 28.4 million non-voting common shares of The Charles Schwab Corp. SCHW,
-0.48%
for proceeds of approximately $1.9 billion to fund the purchase. The transaction reduced TD’s ownership interest in Schwab to 12% from about 13.4%. TD stock is down about 15.9% so far in 2022, compared to a 13.6% drop in the S&P 500 SPX,
-0.28%,