PORTLAND (AP) – A Canadian financial group is discussing “a possible transaction” with Banknorth Group Inc., the companies confirmed Wednesday amid reports that the Canadian bank was seeking a controlling stake. Banknorth shares jumped more than 10 percent after the announcement.

Banknorth has more than 350 branches in New England and upstate New York and assets of $29.3 billion. It is the parent company of Peoples Heritage Bank, which employs roughly 800 people at its Bates Mill processing center in Lewiston.

Peoples also has branches throughout central and western Maine, including two branches each in Lewiston, Auburn and Farmington and one each in Lisbon Falls, Mechanic Falls, Oxford, Gray, South Paris, Casco and Bridgton.

Banknorth has been viewed in recent years as a potential takeover target. The Canadian company, TD Bank Financial Group, is based in Toronto and owns Toronto-Dominion Bank, which has assets of nearly $240 billion and more than 1,000 branches across Canada.

The companies said in a prepared statement that negotiations are under way.

“At this point there can be no assurances that the discussions will lead to an agreement,” the statement said. “The companies do not intend to comment further on this subject unless an agreement is reached or the discussions have been terminated.”

Published reports said that TD Bank and Banknorth are in advanced stages of negotiations that would see TD Bank take controlling interest in Banknorth in a cash and stock deal that could be worth $2.2 billion to $3.5 billion. The deal would value Banknorth shares at 20 percent to 30 percent above Tuesday’s close of $31.70 a share, The Wall Street Journal reported, citing people familiar with the talks.

In afternoon trading on the New York Stock Exchange, Banknorth shares were up $3.38, or 10.7 percent, at $35.08 a share, while TD Bank’s U.S. shares were down 86 cents, or 2.4 percent, to $34.33 a share.

James Ackor, director of equity research at RBC Capital Markets in Portland, said a merger would make sense for both companies.

For Banknorth, it would give shareholders a premium while allowing the company to remain intact and continue growing through acquisitions. Commercial customers would benefit with more products and services, and personal banking customers probably wouldn’t see any difference, he said.

It would give TD Bank a foothold in the United States with a profitable, conservatively run institution that is of sufficient size to expand over time.

TD has made previous attempts to enter the U.S. market. Canadian banks are interested in the U.S. market because there are relatively few banks – and therefore few merger opportunities – in Canada, Ackor said.

Last year, it was in talks to merge its TD Waterhouse brokerage with online broker ETrade Financial Corp. The merger would have created the second-largest discount broker in the United States, but talks were called off in January after the two sides said they couldn’t agree on terms.

Banknorth has been a buying spree of its own in recent years, acquiring small community banks primarily in Massachusetts and Connecticut. With Bank of America Corp.’s takeover of FleetBoston Financial earlier this year, Banknorth became the largest banking company with headquarters in New England.

Banknorth Group’s banking subsidiaries include Peoples Heritage in Maine, Bank of New Hampshire, Banknorth Massachusetts, Banknorth Vermont, Banknorth Connecticut and Evergreen Bank in upstate New York.

– With staff reports