(Reuters) – Laurentian Bank of Canada’s shares fell 9% on Friday after a newspaper reported that the Montreal-based bank was struggling to find an acquirer and that Canada’s top banks – Bank of Nova Scotia and Toronto-Dominion Bank – had backed out of the race.
Scotiabank, widely considered a potential buyer, made the decision on Wednesday, the Globe and Mail reported late on Thursday, citing two sources familiar with the matter.
TD is also not bidding for Laurentian, the report added. In May, TD had called off its $13.4 billion takeover deal for U.S.-based First Horizon.
“This likely lowers the probability of a sale to less than 50%, but if not, at the very least, reduces the chances of a ‘bidding war’ for Laurentian,” analysts at Barclays said.
The reported move comes weeks after Laurentian, Canada’s ninth-largest bank, said it was reviewing strategic options.
The deadline for the first bid was set for the end of the month, the Globe reported.
A spokesperson for Laurentian Bank declined to comment on the report, when contacted by Reuters, saying the bank’s “strategic review is still under way” and the “board of directors is actively examining the options available.”
Scotiabank said it does not comment on rumor or speculation. TD Bank did not immediately respond to a Reuters request for comment.
Scotiabank was viewed as a potential and motivated bidder owing to its desire to expand in the Quebec market, while TD could look to expand at home as it sits on excess capital after its failed deal attempt south of the border.
At the same time, Laurentian is halfway through its own three-year turnaround plan, led by its CEO Rania Llewellyn, a former Scotiabank executive.
Shares of Laurentian, which jumped 27% after reports of a sale earlier this month, have gained about 35% so far this year.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Nivedita Balu in Toronto; Editing by Shailesh Kuber and Matthew Lewis)