Charles Schwab Buys TD Ameritrade in $26 Billion Deal

Two of the largest US brokerage firms are joining forces to form a financial ‘power house.’

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Need to Know

  • After the acquisition, the resulting combined firm will serve 24 million client accounts and more than $5 trillion in client assets.
  • Schwab and TD Ameritrade generated total annualized revenue and pre-tax profits of approximately $17 billion and $8 billion respectively.
  • Over 40 years ago, Schwab and TD Ameritrade started out as alternatives to traditional Wall Street brokerages, leading a revolution to become the preferred model for full-service investing.

Analysis

Brokerage firm Charles Schwab has entered into a definitive agreement to acquire TD Ameritrade, partly owned by Toronto Dominion Bank, in an all-stock transaction valued at approximately $26 billion. Schwab is one of the largest brokerage firms in the US, managing $3.75 trillion worth of assets

The resulting combined “super-firm” will serve nearly 25 million client accounts and support the needs of investors at every stage of their financial journey, deepening the array of products and services offered. 

“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. Adding, “Now we look to join forces with a respected firm like Schwab that shares our relentless focus, and to do more than we could do apart. Together, we can deliver the ultimate client experience for retail investors and independent registered investment advisors.”

Following the merger of the two largest brokerage firms, TD Ameritrade stockholders will receive a 17% premium on their stock holdings, based on the average share price as of the close on November 20.

Charles Schwab, known as one of America’s pioneering brokerage firms was founded in 1971. Schwab now holds more than 365 offices and 12.1 million active brokerage accounts, 1.7 million corporate retirement plan participants, and 1.4 million banking accounts.

TD Ameritrade is a leader in U.S. retail trading and provides investing services and education to approximately 12 million client accounts and executes an average of approximately 800,000 trades per day.

The integration is expected to take between 18 and 36 months and will result in the corporate headquarters of the combined company being relocated to Schwab’s new campus in Westlake, Texas.

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