TD Ameritrade Holding Corp and its largest stakeholder, Toronto-Dominion Bank, agreed to buy Scottrade Financial Services Inc for US$4 billion, combining two of the largest online brokerages while expanding the US operations of Canada’s second-largest lender.
TD Ameritrade will acquire Scottrade’s brokerage operations for about US$2.7 billion in cash and stock, the firm said in a statement on Monday.
Toronto-Dominion, which owns about 42 percent of TD Ameritrade, agreed to purchase Scottrade’s online bank for US$1.3 billion in cash, adding to its US branch network that stretches from Maine to Florida, the Toronto-based lender said in a separate statement.
Photo: EPA
The deal is expected to be completed by Sept. 30, next year, with clearing operations moving to TD Ameritrade systems the next year.
About 28 million shares in TD Ameritrade are to be issued to Scottrade shareholders and Toronto-Dominion is to purchase another 11 million shares in the firm, which will help fund the US$1.7 billion cash portion of the price.
The companies expect US$450 million in annual cost savings, with a quarter of that coming in the first year after the close.
“This combination will allow us to leverage our strengths, increase our scale and further accelerate our asset gathering capabilities,” TD Ameritrade chief executive officer Tim Hockey said in a conference call to discuss the deal.
The acquisition of Scottrade adds to a flurry of recent deals in an industry that is facing pressure from lower trading volumes and sluggish revenue growth.
E-Trade Financial Corp in July bought Aperture New Holdings Inc, parent of the futures and options trading platform OptionsHouse, in a US$725 million cash deal, and Ally Financial Inc a month earlier purchased TradeKing Group Inc for about US$275 million.
Toronto-Dominion gains Scottrade Bank, a business with about US$13 billion in cash and securities, US$4 billion in loans and leases and US$15 billion in sweep deposits as of Sept. 30.
Scottrade Bank offers personal banking for Scottrade brokerage customers, business lending, loan servicing and commercial equipment financing. Toronto-Dominion is to take US$175 million of goodwill tied to the acquisition and its common equity tier 1 ratio is to decrease by about 30 basis points after the deal.
The acquisition is expected to add to earnings in the first full year after closing.
Toronto-Dominion’s stake in TD Ameritrade will be 41.4 percent after the deal, the lender said.
Toronto-Dominion has spent more than US$17 billion building a US branch network since 2005 and has sought to fortify its wealth-management business since buying New York money manager Epoch Investment Partners in 2013 to attract more wealthy US clients.
The lender has more recently focused on buying credit-card portfolios, although chief executive officer Bharat Masrani said as recently as lat month that he is still interested in “tuck-in acquisitions” and other US assets if they make strategic sense.
TD Ameritrade, based in Omaha, Nebraska, has a market value of US$19.5 billion. Closely held Scottrade, based in Town and Country, Missouri, last year had US$1.04 billion of revenue, Wells Fargo & Co analysts led by Christopher Harris said in a report this month.
Online platforms are used by consumers, wealth advisers and other investors to trade securities outside of traditional brokerages. The brokerages have been squeezed in recent years amid competition from automated investment systems, known as “robo-advisers,” and a shift away from stock picking and day-trading toward passive vehicles.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce