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.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
RSS