Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
November 25, 2019 07:03 AM

Charles Schwab to buy TD Ameritrade

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Bloomberg

    Charles Schwab Corp. agreed to buy TD Ameritrade Holding Corp. for about $26 billion in a deal that will reshape the retail brokerage business.

    TD Ameritrade stockholders will receive 1.0837 Schwab shares for each TD Ameritrade share, the companies said in a statement Monday. That’s a 17% premium based on the average share price as of the close on Nov. 20.

    Announcement of the deal comes after news of an acquisition broke Thursday, sending up shares of both firms. Schwab, America’s original discount broker, will now have even more sway over the sector it pioneered nearly a half-century ago.

    “Our view is that this is a great deal for the consumer,” Schwab Chief Executive Officer Walt Bettinger said on a conference call Monday with analysts. “We’ve been doing nothing but driving costs down for decades.”

    The equity value of the deal is $28.3 billion based on Schwab’s closing price of $48.20 on Nov. 22. Schwab shares fell 0.3% at 10:16 a.m. in New York trading. TD Ameritrade, the Omaha-based brokerage that’s partly owned by Toronto-Dominion Bank, rose 4%.

    The tie-up creates a mega-firm with $5 trillion in assets — a Goliath that may attract the attention of antitrust regulators, analysts say. Smaller brokerages like E-Trade Financial Corp. will have to contend with a much more formidable competitor.

    The combined firm will relocate its headquarters to Schwab’s new campus in Westlake, Texas. Schwab’s San Francisco operations will remain a sizable hub.

    TD Bank, which holds 43% of TD Ameritrade, will own roughly 13% of the new business. Its voting stake will be limited to 9.9%, with the rest of its position in a non-voting class of stock. The Canadian lender will have two new seats on the combined firm’s board, while TD Ameritrade will name a single director.

    Shares of both companies rose as news of a deal broke.

    As a result of the deal, Schwab will see its business add 12 million client accounts, $1.3 trillion in assets, and roughly $5 billion a year in revenue.

    Mr. Bettinger downplayed the potential antitrust risks of the combination.

    “We have numerous competitors, many of which are far larger than us today and far larger than a combined organization,” he said on the call. “They’re going to continue to come right after us, as they are now in all aspects of the business.”

    Schwab said in the statement that the new firm will have “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.”

    Schwab last month eliminated commissions for U.S. stock trading, forcing other brokerages to follow suit and sweeping away an important revenue stream. Analysts speculated that online brokerages might have to cut deals to survive the increased industry pressure.

    TD Ameritrade has relied more on commissions than some competitors, drawing 36% of its net revenue from commissions in 2018, compared to 7% at Schwab.

    Founder Charles Schwab hinted he was open to dealmaking in an interview with Bloomberg Radio in October. “I don’t know whether we’ll be successful in that pursuit, but in the industry you’re going to see more consolidation, more firms getting together,” he said. “You just have to have that scale and volume.”

    If the deal goes through, the combined company will have unparalleled clout as top custody service providers to independent financial advisers. That may give authorities pause, Keefe, Bruyette & Woods analyst Kyle Voigt wrote Thursday. He estimates Schwab has about a 50% market share of registered investment adviser custody assets, while TD Ameritrade may have as much as 20%.

    The acquisition comes after TD Ameritrade announced in July that CEO Tim Hockey would leave early next year. Mr. Hockey denied at the time that his departure had anything to do with a potential deal.

    Credit Suisse Group advised Schwab on the deal, while PJT Partners and Sandler O’Neill & Partners advised TD Ameritrade’s board. J.P. Morgan Chase & Co. advised TD Bank and Barclays advised the family of Joseph Ricketts, TD Ameritrade’s founder and largest individual shareholder.

    Related Articles
    Schwab to pay $1.8 billion for USAA investment management assets
    Rehearing request denied in Charles Schwab 401(k) case
    Charles Schwab Investment Management
    Recommended for You
    BlackRock's Larry Fink sees volatility lingering even as trade tensions ease
    BlackRock's Larry Fink sees volatility lingering even as trade tensions ease
    Logos for Hub International, Alpha Wave Global, Temasek and T. Rowe Price.
    T. Rowe Price, Temasek, Alpha Wave back HUB International with minority investments
    Close-up of a handshake with people blurred in the background.
    Rothschild taps former Citigroup exec as head of real estate-North America
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print