Charles Schwab to buy rival TD Ameritrade in $26B stock deal

25 Novembre, 2019, 19:08 | Auteur: Auguste Feret

Charles Schwab Corp said on Monday it would acquire TD Ameritrade Holding Corp in an all-stock deal valued at US$26-billion, combining the two largest USA discount brokerages.

TD Ameritrade stockholders would receive 1.0837 Schwab shares for each TD Ameritrade share they own. Schwab, America's original discount broker, will now have even more sway over the sector it pioneered almost a half-century ago.

Shares of TD Ameritrade, an Omaha-based brokerage that's partly owned by Toronto-Dominion Bank, fell less than 1% on Friday after surging 17% the day before as investors learned of a possible deal.

The tie-up creates a mega-firm with $5 trillion in assets - a Goliath that may attract the attention of antitrust regulators, analysts say.

The combined company will eventually be headquartered at Schwab's new campus in Westlake, Texas, northwest of Dallas.

The Toronto-Dominion Bank, which now holds approximately 43 per cent of TD Ameritrade's stock, will have an ownership position of approximately 13 per cent in the combined company, with other TD Ameritrade stockholders and existing Schwab stockholders holding approximately 18% and 69%, respectively. The Canadian lender will have two new seats on the combined firm's board, while TD Ameritrade will name a single director. Schwab is already the dominant player in the industry with $3.8 trillion in client assets, and TD Ameritrade would add another $1.3 trillion to that pot, reports CNBC.

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Charles Schwab chief executive Walter Bettinger said: "We believe the combination of our two great companies positions us to be competing and winning in the investment services business for the long run".

While the deal could give Schwab an edge in the price war, analysts and anti-trust experts said the merger would face tough regulatory scrutiny, although it could still be approved.

Schwab's last month eliminated commissions for US stock trading, forcing other brokerages to follow suit and sweeping away an important revenue stream. The acquisition of TD Ameritrade capitalizes on the industry tumult that Schwab created in October by cutting commissions to zero.

By itself, Schwab may control close to half the market for acting as a custodian for money managed by registered investment advisers, for example, while TD Ameritrade may control about 15% to 20%, according to Kyle Voigt, an analyst with Keefe, Bruyette & Woods.

TD Ameritrade, whose CEO Tim Hockey was due to step down in February, suspended its CEO search and named Chief Financial Officer Stephen Boyle as interim head to lead the company's proposed integration.



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