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Charles Schwab Will Buy TD Ameritrade for $26 Billion
Charles Schwab, the largest US broker, announced the purchase of its competitor, TD Ameritrade, by pooling of interests. The deal amounted to $ 26 billion.
Schwab shareholders will own 69% of the merged company, and TD Ameritrade shareholders will own 18% of it. The remaining 13% will be held by Toronto Dominion Bank, TD Ameritrade’s largest shareholder.
Carles Schwab and TD Ameritrade have been developing along similar lines. Both online brokers were created about 40 years ago by having launched a challenge against traditional companies, significantly reduced the cost of trading in securities and investments and made them more accessible to a wide range of individuals. But in recent years, they already had to experience problems due to the arrival of financial and technological companies to the market that allowed them to carry out operations with stocks and exchange-traded funds via mobile apps, canceled commissions for trading operations and even began to offer share trading in parts.
Large brokers reduced trade commissions in recent months. Schwab was the first major player that abolished trade commissions. Schwab’s competitors, such as Fidelity and TD Ameritrade, quickly follow the path taken by Schwab.
After lower trade commissions, Schwab and TD Ameritrade were placed under pressure as investors feared that lost commissions would affect margins. However, Schwab has proven that its free trade pays off with new customer accounts. Charles Schwab has a market capitalization of $ 57.5 billion and TD Ameritrade has a market capitalization of $ 22.4 billion.
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