UPDATE 1-TD Bank buys South Financial at steep discount Mon May 17, 2010 8:07am EDT
* South Financial holders to get $0.28/shr or 0.004 TD shrs
* TD to pay $130.6 mln to U.S. Treasury
* Deal to close in TD's Q3
* Deal to add to TD's earnings in 2011 May 17 (Reuters) - Canada's Toronto-Dominion Bank (TD.TO) agreed to buy troubled U.S. lender South Financial Group Inc (TSFG.O) for about $61 million in cash or stock, less than half of the U.S. bank's current market value.
The deal represents a 60 percent discount to South Financial's Friday closing of 67 cents on Nasdaq. As of May 14, the bank's market capitalization was $144.5 million, according to Reuters data.
However, TD Bank said it would pay another $130.6 million in cash to the United States Treasury to buy $347 million of South Financial preferred stock.
TD Bank expects the deal to add slightly to its earnings in fiscal 2011.
The Greenville, South Carolina-based South Financial said last month that it will continue to report losses during 2010 and may enter into a formal agreement with regulators on its capital levels. [ID^nSGE63K0KI]
At March 31, South Financial had a total of $8 billion in loans and $9.8 billion in deposits. (Reporting by Supantha Mukherjee in Bangalore; Editing by Aradhana Aravindan)