The Charles Schwab Corporation has agreed to acquire TD Ameritrade for $26 billion in an all-stock transaction. TD Ameritrade shareholders will receive 1.0837 Schwab shares per share they own.
The price is a 17% premium over the 30-day volume average price as of November 20, 2019.
According to Schwab, the acquisition will add 12 million client accounts, $1.3 trillion in client assets, and about $5 billion in annual revenue. In addition, both boards approved the transaction, the two firms said in a joint statement.
Following closure, The Toronto-Dominion Bank will own 13% of the combined entity. Currently, the bank owns 43% stake in TD Ameritrade. Existing TD Ameritrade and Schwab shareholders will own 18% and 69%, respectively.
“[Together we] will be uniquely positioned to serve the investment, trading and wealth management needs of investors across every phase of their financial journeys,” Said Schwab president and CEO Walt Bettinger.
Schwab expects the acquisition to close in the second half of next year. It is subject to customary closing conditions and regulatory clearance. Shareholders of both companies also must approve the combination.
As part of the agreement, TD Bank will have the right to name two representatives on the board of Schwab, while TD Ameritrade will name one.
Credit Suisse Securities served as financial adviser to Schwab, while Davis Polk & Wardwell LLP acted as legal adviser. PJT Partners and Sandler O’Neill + Partners assisted TD Ameritrade on the financial matters. Separately, Wachtell, Lipton, Rosen & Katz acted as legal adviser to TD Ameritrade .