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Charles Schwab to buy TD Ameritrade in $26B deal

By
Don Jacobson
The Wall Street Charging Bull bronze sculpture stands in Bowling Green in the Financial District in Manhattan in New York City on Monday, November 18, 2019. The nation's two largest discount stock brokerages, Charles Schwab and TD Ameritrade, announced merger plans Monday. 
The Wall Street Charging Bull bronze sculpture stands in Bowling Green in the Financial District in Manhattan in New York City on Monday, November 18, 2019. The nation's two largest discount stock brokerages, Charles Schwab and TD Ameritrade, announced merger plans Monday.  | License Photo

Nov. 25 (UPI) -- Charles Schwab announced plans Monday to buy TD Ameritrade in a $26 billion deal, which if approved by regulators would create a new giant in the discount stock brokerage market.

The nation's two biggest publicly traded brokerage firms revealed their plans in a statement in which they said they had reached a definitive agreement on an all-stock merger under which TD Ameritrade stockholders would receive 1.0837 Schwab shares for each TD Ameritrade share, representing a 17 percent premium over the 30-day volume weighted average price exchange ratio as of Nov. 20.

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The resulting combined company would be a mammoth enterprise, serving 24 million client accounts with more than $5 trillion in client assets. Schwab and TD Ameritrade have recently generated total annualized revenue and pre-tax profits of approximately $17 billion and $8 billion, respectively.

"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," Schwab President and CEO Walt Bettinger said in the release.

The deal is expected to close in the second half of 2020 and take between 18 and 36 months to implement, with the combined firm's headquarters to be in Westlake, Texas.

Consolidation was expected in the discount brokerage field after recent competitive moves to eliminate commission fees.

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