TD Bank and TD Ameritrade to buy Scottrade Financial Services for US$4 billion

TORONTO – TD Bank Group (TSX:TD) and TD Ameritrade Corp. have signed a deal to buy Scottrade Financial Services in a cash-and-stock deal valued at US$4 billion.

Under the agreement announced Monday, TD Bank would acquire Scottrade Bank for US$1.3 billion in cash, while TD Ameritrade would take the rest of the brokerage firm for US$2.7 billion in cash and stock.

TD Ameritrade chief executive Tim Hockey called Scottrade a partner with a proven track record.

“This combination will allow us to leverage our strengths and increase our scale, further accelerate our asset gathering capabilities and introduce our award-winning lineup of trading tools, products and education services to millions of new investors,” Hockey said in a statement.

TD Ameritrade said it expects to realize approximately $450 million in combined annual cost savings and more than $300 million in what it described as “additional longer-term opportunities.”

Once the deal closes, Scottrade founder and chief executive Rodger Riney will join the TD Ameritrade board of directors.

“We are confident we have found a great partner in TD Ameritrade, who shares our client-first focus.

“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.”

TD Ameritrade said its payment will include $1 billion or roughly 28 million shares and $1.7 billion in cash. The cash portion would come from $900 million in cash TD Ameritrade already holds, a new $400-million debt offering and the sale of 11 million shares to TD Bank to raise another $400 million.

TD Bank, which already has a large stake in TD Ameritrade, said it expects to hold a 41.4 per cent stake in the firm once the deal is complete.

Scottrade has more than three million client accounts and $170 billion in assets under management.

The deal is subject to regulatory approval and customary closing conditions. The two sides expect to complete the agreement by Sept. 30, 2017.