Confirmed: Charles Schwab to Acquire TD Ameritrade

Charles Schwab will acquire the company for a deal valued at approximately $26 billion.

After reports surfaced last week that Charles Schwab was in talks to by TD Ameritrade, a filing with the US Securities and Exchange Commission (SEC) this Monday has confirmed those rumors.

Namely, the two companies have entered into a definitive agreement for Charles Schwab, an online discount brokerage, to acquire TD Ameritrade in an all-stock transaction valued at approximately $26 billion.

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Stockholders of TD Ameritrade will receive 1.0837 Schwab shares for each TD Ameritrade share. This represents a 17 percent premium over the 30-day volume-weighted average price exchange ratio as of the 20th of November 2019, the statement said.

Transaction to be completed in H2 of 2020

Both parties expect that the transaction will close in the second half of next year. Once the deal has been completed, the integration of the two firms is expected to take between 18 and 36 months.

With the acquisition now in motion, the Board of Directors of TD Ameritrade has suspended its search for a Chief Executive Officer (CEO). Instead, Stephen Boyle, the company’s EVP and Chief Financial Officer (CFO) is the company’s interim President and CEO, effective immediately. 

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Boyle will lead the company through the acquisition with Schwab. Taking the position of CFO is Jon Peterson, formerly Managing Director of Analysis, Planning, and Reporting, according to a separate filing from Ameritrade. 

Schwab, on the other hand, has named Senior EVP and COO Joe Martinetto to oversee the integration. He will be assisted by a team of experts from both companies. The new headquarters of the combined firm will be located in Westlake, Texas.

Walt Bettinger of Charles Schwab
Walt Bettinger, President and CEO of Charles Schwab
Source: LinkedIn

Commenting on the acquisition, Charles Schwab President and CEO Walt Bettinger said: “We have long respected TD Ameritrade since our early days pioneering the discount brokerage industry, and as a fellow advocate for investors and independent investment advisors. 

“Together, we share a passion for breaking down barriers for investors and advisors through a combination of low cost, great service and technology. With this transaction, we will capitalize on the unique opportunity to build a firm with the soul of a challenger and the resources of a large financial services institution that will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys.”

Acquisition gives Charles Schwab $1.3 trillion in assets

As Finance Magnates previously analyzed, Charles Schwab and TD Ameritrade are the two biggest publicly traded discount brokers in the United States. Therefore, the deal between the two players is likely to be a big change for the US market and will create a giant in the brokerage industry with $5 trillion in combined assets.

In fact, the acquisition will provide Schwab with around 12 million clients, $1.3 trillion in assets and approximately $5 billion in annual revenue.

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