Charles Schwab is acquiring rival discount brokerage TD Ameritrade in an all-stock deal valued at $26 billion – creating a broker with over $5 trillion in client assets.
Under terms of the deal, which is expected to close in the second half of next year, TD Ameritrade stockholders will receive 1.0837 Schwab shares for every share held, a 17% premium over the stock’s 30-day average price before today’s announcement was made.
Schwab’s current shareholders will own 69% and TD Ameritrade’s existing stockholders will own 18% of the combined company. TD Bank, which currently owns 43% of TD Ameritrade, will own the proportionate 13% of the new company.
The combined company will serve more than 24 million clients. San Francisco-based Schwab has a market value of $57.5 billion, while Omaha-based TD Ameritrade has a $22.4 billion market cap.
The combined company’s headquarters will relocate to Schwab’s new campus in Westlake, Texas.
“With this transaction,” said Schwab President and CEO Walt Bettinger, “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.”
TD Ameritrade CEO Tim Hockey previously announced plans to step down next February. Its CFO, Stephen Boyle, has been named TD Ameritrade’s interim president and CEO, and will continue in that role until the acquisition is finalized.
Schwab’s New York locations include Mount Kisco and Scarsdale, while TD Ameritrade also has an office in Scarsdale. In Connecticut, Schwab has offices in Fairfield, Greenwich and Ridgefield, while TD Ameritrade has locations in Brookfield, Fairfield and Stamford.