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.
UNCERTAINTIES: Exports surged 34.1% and private investment grew 7.03% to outpace expectations in the first half, although US tariffs could stall momentum The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast to 3.05 percent this year on a robust first-half performance, but warned that US tariff threats and external uncertainty could stall momentum in the second half of the year. “The first half proved exceptionally strong, allowing room for optimism,” CIER president Lien Hsien-ming (連賢明) said. “But the growth momentum may slow moving forward due to US tariffs.” The tariff threat poses definite downside risks, although the scale of the impact remains unclear given the unpredictability of US President Donald Trump’s policies, Lien said. Despite the headwinds, Taiwan is likely
READY TO BUY: Shortly after Nvidia announced the approval, Chinese firms scrambled to order the H20 GPUs, which the company must send to the US government for approval Nvidia Corp chief executive officer Jensen Huang (黃仁勳) late on Monday said the technology giant has won approval from US President Donald Trump’s administration to sell its advanced H20 graphics processing units (GPUs) used to develop artificial intelligence (AI) to China. The news came in a company blog post late on Monday and Huang also spoke about the coup on China’s state-run China Global Television Network in remarks shown on X. “The US government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon,” the post said. “Today, I’m announcing that the US government has approved for us
When Lika Megreladze was a child, life in her native western Georgian region of Guria revolved around tea. Her mother worked for decades as a scientist at the Soviet Union’s Institute of Tea and Subtropical Crops in the village of Anaseuli, Georgia, perfecting cultivation methods for a Georgian tea industry that supplied the bulk of the vast communist state’s brews. “When I was a child, this was only my mum’s workplace. Only later I realized that it was something big,” she said. Now, the institute lies abandoned. Yellowed papers are strewn around its decaying corridors, and a statue of Soviet founder Vladimir Lenin
The National Stabilization Fund (NSF, 國安基金) is to continue supporting local shares, as uncertainties in international politics and the economy could affect Taiwanese industries’ global deployment and corporate profits, as well as affect stock movement and investor confidence, the Ministry of Finance said in a statement yesterday. The NT$500 billion (US$17.1 billion) fund would remain active in the stock market as the US’ tariff measures have not yet been fully finalized, which would drive international capital flows and global supply chain restructuring, the ministry said after the a meeting of the fund’s steering committee. Along with ongoing geopolitical risks and an unfavorable
RSS