TD Ameritrade Holding has agreed to acquire online brokerage Scottrade Financial Services in a cash and stock deal worth $4bn.
The deal will be executed in two steps, which includes TD Bank Group’s acquisition of Scottrade's banking unit Scottrade Bank for $1.3bn in cash. Scottrade Bank will eventually merge with and into TD Bank, a subsidiary of The Toronto-Dominion Bank.
The second step includes TD Ameritrade’s acquisition of Scottrade Financial Services for $2.7bn.
The combined entity will have $944bn in client assets and 600,000 average client trades a day.
TD Ameritrade president and CEO said: “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, further accelerate our asset gathering capabilities and introduce our award-winning line-up of trading tools, products and education services to millions of new investors.”
The deal already secured the nod of the boards of directors of all the companies. It is expected to be completed by 30 September 2017, subject to regulatory approval. Clearing operations are expected to move to TD Ameritrade systems in 2018.
Scottrade founder and CEO Rodger Riney will join TD Ameritrade’s board of directors after completion of the deal.
“Joining forces will enable us to offer clients an expanded array of trading tools, enhanced education resources and advanced option capabilities with broader geographic reach. Together, we will be well-positioned to compete in today’s rapidly evolving financial services industry,” Riney said.
TD Ameritrade expects “approximately $450m in combined annual expense synergies, and more than $300m in additional longer-term opportunities” from the deal.