Morgan Stanley Raises TD Target To $87 From $85

Toronto Dominion Bank (NYSE: TD) has announced an agreement to purchase Chrysler Financial from Cerberus Capital Management, L.P. for cash consideration of approximately US$6.3 bn, Morgan Stanley reports.

“The purchase is comprised of net assets of US$5.9 bn and approximately US$400 mn in goodwill,” Morgan Stanley writes. “Estimated loans and leases outstanding at closing will be approximately US$7.5 bn (90% US, 10% Canadian).”

Morgan Stanley said that it believes the acquisition is positive for Toronto Dominion, adding, “First, the deal diversifies TD's consumer loan portfolio, particularly in US P&C. Second, the acquisition of Chrysler Financial's infrastructure and platform should allow TD to drive higher loan growth. Third, the deal helps improve the loan/deposit imbalance in TD's US P&C business.”

Morgan Stanley is raising its price target $2 to $87.

Toronto Dominion Bank currently trades at $73.59.