Charles Schwab today announced that it has completed its acquisition of TD Ameritrade, in an all-stock deal valued at $22 billion, which is $4 billion less than the original valuation.
The deal between the two largest publicly traded discount brokers was first announced in Nov. 2019, and received antitrust approval from the U.S. Department of Justice and approval from stockholders of both firms in June. The last hurdle was cleared with final regulatory approval from the Federal Reserve six days ago.
In uniting two of the four largest players in the RIA custody market, the acquisition creates a brokerage giant with a combined total of approximately $6 trillion in client assets (as of Aug. 31, 2020), 28 million brokerage accounts and more than 5 million daily average trades.
“This is a historic moment that brings together two leading companies with proud and successful histories of making investing more accessible to all,” said Schwab President and CEO Walt Bettinger. “As we begin this next chapter, we remain focused on continuing to be the industry’s most trusted leader in investment services. Looking forward, we intend to quickly and efficiently harness our complementary strengths in order to break down even more barriers for investors. In doing so, we intend to deliver a winning combination of low costs, great service and industry-leading technology to support our clients, and the advisors who serve them, across every phase of their financial journey.”
The integration of Schwab’s and TD Ameritrade’s operations is expected to occur over the next 18 to 36 months. Until the integration is complete, Schwab and TD Ameritrade will continue to operate separate broker-dealers to serve their respective clients. Until then, the products, services and delivery channels currently available from the two companies remain largely unchanged, and clients should continue to call Schwab for Schwab account business and TD Ameritrade for TD Ameritrade account business.
“Schwab is proud to welcome TD Ameritrade’s talented employees, and we look forward to serving TD Ameritrade’s clients,” Bettinger added. “We are committed to maintaining our sharp focus on seeing ‘Through Clients’ Eyes’ as we begin to integrate our companies carefully and thoughtfully and prepare our plans to transition brokerage accounts at TD Ameritrade’s broker-dealers to Schwab’s broker-dealer in the future.”
Integration efforts well underway
The acquisition of TD Ameritrade delivers significant scale to Schwab. The combined company will be positioned to deliver a broader and more extensive range of services and solutions at lower costs to Schwab and TD Ameritrade clients, including individual investors as well as the Registered Investment Advisors (RIAs) who custody their clients’ assets with the companies.
As a first step, on August 5, 2020, Schwab announced it intends to integrate TD Ameritrade’s award-winning thinkorswim and thinkpipes trading platforms, educational resources and tools into its trader offerings for retail and independent advisor clients. Schwab also plans to retain TD Ameritrade Institutional’s customizable portfolio rebalancing solution iRebal as part of its offering for independent advisor clients.
Following the integration, the combined company’s other innovative and client-centric products will include leading wealth management platforms, RIA custody platforms and tools, investor education, award-winning service, retirement services, banking and asset management.
Per the merger agreement, TD Ameritrade stockholders received 1.0837 Schwab shares for each TD Ameritrade share owned, which Schwab CFO Peter Crawford said in a deal commentary released Oct. 6 represents a 17% premium over the 30-day volume weighted average price exchange ratio as of November 20, 2019.
“We are so proud of all the work both companies have put in to get us to this day. We know there will be tough decisions and challenges to overcome as these two great firms come together, but we believe the potential of the combined firm is undeniably compelling,” Crawford said. “We remain confident that we have the right people, resources, and plan to take full advantage of the opportunity in front of us: to provide an enhanced experience for our combined client base as well as deliver long-term value for stockholders.”
Corporate HQ moving to Texas
In conjunction with the close of the acquisition, Schwab announced that effective January 1, 2021, it expects to complete the planned change in the designation of its corporate headquarters from San Francisco to its new $100 million campus in Westlake, Texas, first announced last November.
Opened in late 2019, the Westlake location and facility were specifically chosen and designed as a more centrally located hub for the company given Schwab’s nationwide presence across a network of branches and operations centers. It will also serve as a central location for meetings of the company’s board and its leadership team, which is also geographically dispersed across the country.
Both companies have a sizable presence in the Dallas-Fort Worth area. The approximately one million-square-foot Westlake campus could eventually house about 7,000 employees.
The company does not anticipate any impact on the vast majority of San Francisco-based roles and expects to continue hiring in the city.
More information and FAQs for clients of both companies is available at welcome.schwab.com.
SEE ALSO:
- DOJ, Stockholders Approve $26 Billion Schwab-TD Ameritrade Merger
- Big Deal is Official: Schwab to Acquire TD Ameritrade
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
