TD Ameritrade Scottrade merger: A new stock market leader emerges

Today, the TD Ameritrade (AMTD.O) and Scottrade Financial Services Inc. takeover has been officially confirmed. What are the terms of the TD Ameritrade Scottrade merger?

24 October, AtoZ Markets – TD Ameritrade has agreed to acquire the privately owned Scottrade, through a two-step cash and stock transaction worth $4 billion. The TD Ameritrade Scottrade merger combines the two largest discount brokers in the US, both prominent leaders in the stocks retail market.

What are the terms of the TD Ameritrade Scottrade merger?

The agreement will take place in two steps that is to be finalised by TD Ameritrade, through paying $2.7 billion for Scottrade’s brokerage business in cash and stock. Toronto-Dominion, Canada’s second-biggest bank by assets which owns about 42 percent of TD Ameritrade, will be a part of the TD Ameritrade Scottrade merger by purchasing Scottrade’s banking operations for $1.3 billion in cash.

Scottrade Founder and CEO Roger Riney will join the board of directors of TD Ameritrade after the close of the deal, which is expected to be by September, 30, 2017. Roger Riney commented:

“Since founding Scottrade in 1980, our mission has been to lower the cost of investing and trading while treating clients fairly and honestly. We are confident we have found a great partner in TD Ameritrade, who shares our client-first focus. Together, we will be well-positioned to compete in today’s rapidly evolving financial services industry.”

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How will TD Ameritrade benefit of the acquisition?

TD Ameritrade is expecting to retain about $450 annually integrated with expenses, and over $300 million in “additional longer-term opportunities”. TD Ameritrade president and chief executive officer Tim Hockey stated:

“TD Ameritrade has been committed to breaking down the barriers that stand between American investors and Wall Street. We’ve found in Scottrade a partner with an equally-strong passion and a proven track record for delivering exceptional client experiences. This combination will allow us to leverage our strengths and increase our scale.”

Acting as financial advisor to TD Ameritrade is Barclays Capital Inc., while Wachtell, Lipton, Rosen & Katz are the legal advisors over the merger. As for Scottrade, the financial advisor is Goldman, Sachs & Co., and Sullivan & Cromwell act as legal advisor.

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