“This is a historic moment that brings together two leading companies with proud and successful histories of making investing more accessible to all,” Walt Bettinger, president and CEO of Charles Schwab, said. “As we begin this next chapter, we remain focused on continuing to be the industry’s most trusted leader in investment services. Looking forward, we intend to quickly and efficiently harness our complementary strengths in order to break down even more barriers for investors. In doing so, we intend to deliver a winning combination of low costs, great service and industry-leading technology to support our clients and the advisors who serve them across every phase of their financial journey.
“Schwab is proud to welcome TD Ameritrade’s talented employees, and we look forward to serving TD Ameritrade’s clients. We are committed to maintaining our sharp focus on seeing ‘Through Clients’ Eyes’ as we begin to integrate our companies carefully and thoughtfully and prepare our plans to transition brokerage accounts at TD Ameritrade’s broker-dealers to Schwab’s broker-dealer in the future.”
The integration of Charles Schwab’s and TD Ameritrade’s operations is expected to occur over the next 18 to 36 months, although planning for it has been underway since the acquisition was announced on Nov. 25, 2019. Until the integration is complete, Charles Schwab and TD Ameritrade will continue to operate separate broker-dealers to serve their respective clients. Until then, the products, services and delivery channels currently available from the two companies remain largely unchanged, and clients should continue to call Charles Schwab for Charles Schwab account business and TD Ameritrade for TD Ameritrade account business.
With a combined total of approximately $6 trillion in client assets, 28 million brokerage accounts and more than 5 million daily average trades, Charles Schwab expects the acquisition will create enhanced scale that will lower operating expenses as a percentage of client assets (EOCA). In addition, the combined company will deliver a broader range of services and solutions to clients, including individual investors as well as the registered investment advisors (RIAs) who custody their clients’ assets with the companies.
As a first step, on Aug. 5, 2020, Charles Schwab said it intends to integrate TD Ameritrade’s thinkorswim and thinkpipes trading platforms, educational resources and tools into its trader offerings for retail and independent advisor clients. Charles Schwab also plans to retain TD Ameritrade Institutional’s customizable portfolio rebalancing solution iRebal as part of its offering for independent advisor clients. Following the integration, the combined company’s other products will include wealth management platforms, RIA custody platforms and tools, investor education, award-winning service, retirement services, banking and asset management.
As previously announced, TD Ameritrade stockholders received 1.0837 shares of Charles Schwab common stock for each share of TD Ameritrade, except The Toronto-Dominion Bank (TD Bank) and its affiliates, which received Charles Schwab common stock only up to a maximum of 9.9% of the Charles Schwab common stock (including any other shares of Charles Schwab common stock then owned by TD Bank and its affiliates) and otherwise received newly created Charles Schwab nonvoting common stock. The aggregate number of shares of Charles Schwab stock issuable as merger consideration was approximately 509 million shares of Charles Schwab common stock and 77 million shares of Charles Schwab nonvoting common stock.
Effective upon the merger, Todd M. Ricketts, Brian M. Levitt and Bharat B. Masrani were elected to Charles Schwab’s board. Ricketts was designated by TD Ameritrade pursuant to the terms of the merger agreement and Levitt and Masrani were designated by TD Bank pursuant to the terms of the merger agreement and the stockholder agreement between Charles Schwab and TD Bank.
Charles Schwab expects to complete its planned change in the designation of its corporate headquarters from San Francisco to its new campus in Westlake, TX, on Jan. 1, 2021, in conjunction with the close of the acquisition.
Credit Suisse Securities served as financial advisor and Davis Polk & Wardwell acted as legal advisor to Charles Schwab. PJT Partners and Piper Sandler & Co. served as financial advisors and Wachtell, Lipton, Rosen & Katz acted as legal advisor to the strategic development committee of the board of directors of TD Ameritrade.