Charles Schwab Corporation (NYSE: SCHW) is buying TD Ameritrade Holding Corporation (NASDAQ: AMTD) in an all-stock transaction valued at USD 26 Billion, the company announced Monday.
Under the agreement, TD Ameritrade stockholders will receive 1.0837 Schwab shares for each Ameritrade share they own.
“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,” said Schwab President and CEO Walt Bettinger. “Together, we share a passion for breaking down barriers for investors and advisors through a combination of low cost, great service and technology.”
Charles Schwab said the deal is expected to be 10% to 15% accretive to earnings and 15% to 20% accretive to operating cash earnings per share in year three.
“Partnering with Schwab on this transformative opportunity makes the right strategic and financial sense for TD Ameritrade,” said Stephen Boyle, TD Ameritrade interim President and CEO. “We share a common history—a journey since 1975 that has made Wall Street more accessible and financial dreams more attainable for millions of Americans.”
The deal, expected to close in the second half of 2020, merges the two largest publicly traded discount brokers. The combined company will hold more than USD 5 Trillion in client assets, including USD 3.8 Trillion from Schwab and USD 1.3 Trillion from TD Ameritrade. The combined company will serve more than 24 million clients. Schwab has a market value of USD 57.5 Billion and TD Ameritrade has a USD 22.4 Billion market cap.
The integration of Charles Schwab and TD Ameritrade is expected to take between 18 and 36 months following the close of the transaction, the companies said. As part of the process, the corporate headquarters of the combined company will eventually relocate to Westlake, Texas.