Charles Schwab has agreed to acquire rival discount brokerage TD Ameritrade in an all-stock transaction valued at approximately $26 billion.
The acquisition will reshape the retail brokerage industry, creating a combined company serving 24 million client accounts with more than $5 trillion in client assets. Taken together, the two firms recently generated total annualised revenue and pre-tax profits of approximately $17 billion and $8 billion, respectively.
Schwab president and CEO Walt Bettinger says: “Together, we share a passion for breaking down barriers for investors and advisors through a combination of low cost, great service and technology. With this transaction, we will capitalise 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.”
The integration of the two firms is expected to take between 18 and 36 months, following the close of the transaction. Schwab has named senior EVP and COO Joe Martinet to to oversee the merger, which will entail a relocation of the combined company's headquarter operations to Schwab’s new campus in Westlake, Texas.
The business will be led by Stephen Boyle, TD Ameritrade EVP and CFO, who has been named as interim president and CEO.
“Partnering with Schwab on this transformative opportunity makes the right strategic and financial sense for TD Ameritrade,” he says. “We share a common history — a journey since 1975 that has made Wall Street more accessible. Now we look to join forces with a respected firm like Schwab to do more than we could do apart. Together, we can deliver the ultimate client experience for retail investors and independent registered investment advisors. We can continue to challenge the status quo, pooling our resources and expertise and deliver sustainable, long-term value to our many stakeholders.”