Charles Schwab to buy TD Ameritrade in $26 billion deal

Published: Nov 25, 2019 9:44 a.m. ET

Charles Schwab Corp. on Monday said it had reached an agreement to acquire rival discount broker TD Ameritrade Holdings Corp. in an all-stock deal valued at around $26 billion.

Shares of both companies jumped last week after reports they were in talks. The agreement would see TD Ameritrade AMTD, +1.46% stockholders receive 1.0837 Schwab shares for each TD Ameritrade share, representing a 17% premium over the 30-day volume-weighted average price exchange ratio as of Nov. 29. Schwab shares SCHW, +1.47% were off 0.9% in premarket action on Monday, while Ameritrade shares jumped more than 3%.

The combined company would serve 24 million client accounts with more than $5 trillion in client assets.

The deal will give Toronto-Dominion Bank TD, +0.12% , which currently holds around 43% of TD Ameritrade’s common stock, a stake of around 13% in the combined company, with other TD Ameritrade stockholders and existing Schwab stockholders holding approximately 18% and 69%, respectively, the companies said. TD Bank’s voting stake will be capped at 9.9%, however, with the balance of its position held in a new, nonvoting class of Schwab common stock.

Following the close of the transaction, TD Bank will have the right to fill two new seats on the Schwab board of directors while TD Ameritrade will name a single director, the companies said.