The Charles Schwab Corporation and the TD Ameritrade Holding Corporation have entered into a definitive agreement for Schwab to acquire TD Ameritrade in a stock transaction valued at approximately $26 billion.
According to a press release, that represents a 17% premium over the 30-day volume weighted average price exchange ratio as of Nov. 20, 2019. Rumors of the deal emerged last week in a number of published reports.
The deal adds approximately 12 million client accounts, $1.3 trillion in client assets and $5 billion in annual revenue to Schwab’s portfolio, added scale that Schwab says it expects will lead to lower operating expenses as a percentage of client assets (EOCA), which it says will, in turn, help “fund enhanced client experience capabilities, improve the company’s competitive position and further its financial success.”
Coincident with the announcement, the TD Ameritrade Board of Directors has suspended its previously disclosed CEO search, naming Stephen Boyle, TD Ameritrade EVP and CFO, as the company’s interim President and CEO. Boyle will assume leadership of the company effective immediately, guiding its management team through its fiscal 2020 plan and the proposed integration with Schwab.
The transaction is expected to close in the second half of 2020, “with integration efforts to begin immediately thereafter.” Joe Martinetto, Chief Operating Officer of Charles Schwab, will oversee the integration initiative assisted by a team of experts from Schwab and TD Ameritrade. The integration is expected to take between 18 and 36 months.
Reductions in staff are anticipated, and Schwab says that the majority of positions that will be eliminated will be determined based on overlapping and duplicative roles. Details on how these decisions will be reached will be shared at a later date, once the integration process has begun.
As part of the integration process, the corporate headquarters of the combined companies will eventually relocate to Schwab’s new campus in Westlake, TX. According to the press release, since both companies have a sizable presence in the Dallas-Fort Worth area, this will allow the firm to take advantage of the central location of Schwab’s new campus as the hub of a network of Schwab branches and operations centers.
