48.23 +0.10 (0.21%)
After hours: 4:42PM EST
|Bid||48.14 x 2900|
|Ask||48.28 x 1400|
|Day's range||47.27 - 48.71|
|52-week range||32.69 - 57.88|
|Beta (3Y monthly)||1.18|
|PE ratio (TTM)||12.15|
|Earnings date||20 Jan 2020 - 24 Jan 2020|
|Forward dividend & yield||1.24 (2.56%)|
|1y target est||39.23|
Big brokerage buyout reportedly in the making. CNBC reports Charles Schwab is in talks to buy TD Ameritrade. A deal would enable the combined companies to control a majority of the discount brokerage market with total assets of $5 trillion. Fox Business pegged the value of the deal at $26 billion, which would imply a 18% premium to Ameritrade's market valuation. Neither companies responded to Reuters' requests for comment. A deal could be seen as a response to the price wars that have disrupted the industry. Startups like Robinhood are quickly grabbing market share by eliminating commissions on stock trades. That prompted Schwab to scrap commissions on online trading of stocks, ETFs, and options. TD Ameritrade and other rivals quickly followed suit. Also pressuring the discount brokers: low interest rates. That reduces the amount they earn off customer balances. News of a potential deal drove TD Ameritrade shares up 25% at the market open Thursday. Schwab shares rose nearly 12%.
Nov.21 -- Charles Schwab Corp. is nearing a deal to buy TD Ameritrade Holding Corp, according to a person familiar with the matter, reshaping a beleaguered online brokerage sector that’s seen fierce competition from new entrants amid price pressure and alternative ways to invest for clients. Bloomberg's Annie Massa reports on "Bloomberg Markets."
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(Bloomberg) -- Charles Schwab Corp.’s plan to buy rival TD Ameritrade Holding Corp. could face tough antitrust scrutiny over a deal that combines two of the biggest companies that run platforms used by independent financial advisers.The tie-up would create a $5 trillion giant, advancing Schwab’s leading position as custodian for assets managed by financial advisers. That could raise antitrust concerns even as competition among brokerages is driving down fees for investors.“We think this deal may face somewhat significant antitrust hurdles,” Keefe, Bruyette & Woods Kyle Voigt said in a note Thursday.Schwab is the number one player in the market for safeguarding assets managed by registered investment advisers, followed by Fidelity Investments, Voigt said. Schwab may hold about half of the market, while TD Ameritrade may have around 15% to 20%, he said. TD Ameritrade surged as much as 26% Thursday -- the most in 20 years -- while Schwab rallied 14%.Schwab Nears Deal to Buy TD Ameritrade in Industry OverhaulStill, the market is fairly fragmented with smaller competitors and falling management fees have been a boon to investors, a trend that looks unlikely to change, said Bloomberg Intelligence analyst David Ritter.“It’s hard to imagine that that train is going to be slowed by one merger like this,” he said.One of the last major deals in the industry -- TD Ameritrade’s acquisition of Scottrade in 2017 -- won approval from U.S. antitrust officials without conditions. Toronto-Dominion Bank, Canada’s second-largest lender by assets, owns a 43% stake in TD Ameritrade.Although fees are going down for consumers, antitrust officials will focus on whether the deal will mean less competition for the interest paid to investors on their accounts and whether fees on other services could rise, said Robert Litan, a partner at Korein Tillery and a former official with the Justice Department’s antitrust division. The tie-up will likely be reviewed by the Justice Department, he said, instead of the Federal Trade Commission, which also reviews mergers.“The intense competition in the industry has forced them to go to zero commissions, but that doesn’t mean that the market still isn’t susceptible to having consumers hurt as a result of further consolidation,” he said.Cowen analyst Jaret Seiberg said in a note that the takeover will get significant scrutiny from regulators that could stretch into the third quarter of 2020, though he said he expects it will be completed before the next presidential inauguration.“The concern is that this becomes political,” Seiberg said. “Democratic candidates including Senator Elizabeth Warren have been railing against big tech and big banks. It is easy to see how this could get drawn into this anti-big business campaign.”Here’s a sample of other commentary on the deal:UBS, Brennan HawkenThe very large and surprising deal “carries a lot of execution risk,” particularly regarding legal and regulatory issues, Hawken warned in a note.Hurdles include the “size the combined entity would represent in the discount brokerage space,” even if regulators were to take into account full-service wealth management firms like Morgan Stanley and Bank of America Corp., he said. Schwab cutting commissions and then bidding for its “most hindered” competitor might also draw legal challenges and further anti-competitive scrutiny, Hawken said.Hawken added that E*Trade was “left out in the cold,” and appears vulnerable as it had begun to reflect an M&A premium and the Schwab-Ameritrade tie-up would reduce the number of potential buyers. E*Trade slumped as much as 10% today.BofA, Michael CarrierTD Ameritrade’s relationship with holder Toronto-Dominion Bank “creates some complications,” Carrier wrote, including “dis-synergies and a bit tougher regulatory approvals.”Carrier expects merger discussions and activity in the sector in the near term, which is likely to benefit online broker stocks. He sees the Schwab-Ameritrade deal making “strategic sense” as the two have similar business models, particularly regarding retail and registered investment adviser, or RIA, platforms, and TD Ameritrade lacks a permanent CEO.Most firms in the sector, including E*Trade, will likely conduct merger talks given the “pressures on the business, this transaction, game theory, as well as the attractive synergies and accretion,” he said. Shares of companies that get left out may face pressure.Vital Knowledge, Adam CrisafulliNews of Schwab potentially buying TD Ameritrade may weigh on some asset managers as the combined company would be able to exert even more pressure on industry fees, Crisafulli wrote.National Bank, Gabriel DechaineA Schwab deal to acquire TD Ameritrade may be helpful for Toronto-Dominion Bank’s long-term U.S. strategy, according to Dechaine.Toronto-Dominion may end up with 10% to 15% stake in the combined entity, assuming an “all-stock transaction and no additional deal twists,” he said in a note to clients.“Assuming a smaller stake in a bigger player situation, TD could have a more liquid asset that it could potentially sell to finance a future U.S. regional bank acquisition,” Dechaine said. “As such, it would make it easier for TD to make future acquisitions accretive.”(Updates with antitrust analysis starting in second paragraph)\--With assistance from Doug Alexander and Joshua Fineman.To contact the reporters on this story: Felice Maranz in New York at firstname.lastname@example.org;David McLaughlin in Washington at email@example.comTo contact the editors responsible for this story: Catherine Larkin at firstname.lastname@example.org, ;Sara Forden at email@example.com, Divya BaljiFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Charles Schwab Corp.’s plan to buy TD Ameritrade Holding Corp. for $26 billion is proving a boon for the fortunes anchored by two of America’s biggest brokerages.TD Ameritrade founder Joe Ricketts is set to add $400 million to his $2.4 billion net worth after his firm’s shares rose 21% in Thursday. Charles Schwab’s $8.8 billion fortune will increase by about $500 million based on his company’s gains. The deal is worse news for Thomas Peterffy, chairman of rival Interactive Brokers Group Inc., whose net worth was down about $100 million at 11:50 a.m. in New York.The transaction could be announced as early as Thursday, according to a person familiar with the matter. It would create a firm with roughly $5 trillion in combined assets, consolidating an industry under pressure from a price war that escalated when Schwab last month announced plans to eliminate commissions for U.S. stocks, exchange traded funds and options.The combination may pose a threat to fund managers such as Vanguard Group Inc. and BlackRock Inc., according to Bill Capuzzi, chief executive officer of Apex Clearing, a custodian that focuses on fintech firms.“It signals Schwab is going to continue to lean really hard into the advisory side,” he said. “A gigantic percentage of the advisory world will be leveraging one firm for passive custody and clearing services.”For Schwab, the net worth gain may be particularly sweet. In an October interview, he criticized wealth taxes like those proposed by Democratic presidential candidates Bernie Sanders and Elizabeth Warren as a “negative reward for success.”Other winners from the potential acquisition include Toronto-Dominion Bank, which owns 43% of TD Ameritrade, and Canadian insurer Sun Life Financial Inc. with a 3.9% position as of Sept. 30. Generation Investment Management LLP, the firm co-founded by former U.S. Vice President Al Gore, owned a 2% stake in Schwab at the end of the third quarter.(Updates net worth totals in second paragraph, adds Apex CEO’s comment in fourth.)To contact the reporter on this story: Tom Metcalf in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Pierre Paulden at email@example.com, ;Michael J. Moore at firstname.lastname@example.org, Steven CrabillFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
No dollar amount has been reported as of yet, although assets under management from such a merger would create roughly $5 TRILLION in assets under management.
(Bloomberg) -- First, Charles Schwab Corp. upended the retail brokerage business by cutting commissions to zero. Now, it’s seizing on the turmoil it unleashed to acquire one of its biggest rivals, TD Ameritrade Holding Corp.Just weeks after Schwab stunned competitors by letting customers trade stocks for free, the company is moving to tighten its grip on the industry with talks to acquire TD Ameritrade, according to a person familiar with the matter.The deal would give Schwab, America’s original discount broker, even more sway over the industry it pioneered nearly a half-century ago -- and an edge in the intensifying battle for ordinary investors’ dollars, and the investment adviser business. The tie-up would result in a $5 trillion titan, but analysts say it could attract antitrust scrutiny.“An acquisition of TD Ameritrade would expand Schwab’s roster of active traders and solidify its leading position serving independent advisers,” said David Ritter, a financials analyst with Bloomberg Intelligence.A transaction could be announced as early as Thursday, the person said, asking not to be identified because the discussions are private. The companies didn’t immediately respond to emails and phone calls seeking comment.TD Ameritrade jumped about 20% at 10:33 a.m. in New York trading, the most since 2008. Schwab gained 8.1% after earlier rising as much as 14%.Shares of E*Trade Financial Corp., which analysts have speculated TD Ameritrade might want to buy, fell 9%. A deal between its two rivals could leave smaller brokerage E*Trade contending with a more formidable competitor than ever.Schwab’s move to zero commissions forced other brokerages to follow suit and triggered a slump in the shares of firms, with TD Ameritrade among the hardest hit. It swept away a revenue stream and rekindled speculation that online brokerages might have to cut deals to survive the increased industry pressure.TD Ameritrade has relied more on commissions than some competitors, drawing 36% of its net revenue from commissions in 2018, compared to 7% at Schwab.For founder Charles Schwab, ending commissions has been a longtime goal.“I hated commissions,” Schwab said at the Impact 2019 conference in San Diego. “I hated them then. I hate ’em now. I took ’em away.”QuickTake: Farewell, Fees? How Zero-Cost Investing Caught OnSchwab had also hinted he was open to deal-making.“I don’t know whether we’ll be successful in that pursuit, but in the industry you’re going to see more consolidation, more firms getting together,” he in an interview with Bloomberg Radio in October. “You just have to have that scale and volume. So we’re prepared to do it if the opportunity arises. If not we’re perfectly happy to go it alone.”A deal between the two companies could face anti-trust scrutiny, Keefe, Bruyette & Woods analyst Kyle Voigt wrote in a client note Thursday.Schwab and TD Ameritrade are both top custody service providers to independent financial advisers, which could give authorities pause. Voigt estimates Schwab has about a 50% market share of registered investment adviser custody assets, while TD Ameritrade may have up to 20%.An acquisition would come at a time of transition for TD Ameritrade. The Omaha-based brokerage said in a surprise announcement in July that Chief Executive Officer Tim Hockey would leave no later than the end of February 2020, rekindling questions of whether it would pursue a deal. Hockey denied that his departure had anything to do with a potential deal at the time. Toronto-Dominion Bank, Canada’s second-largest lender by assets, owns a 43% stake in TD Ameritrade.Todd Rosenbluth, director of ETF research at CFRA Research, said that a tie-up of the two firms could help address the burn of zero commissions with increased scale.“It would reduce the likelihood that investors bounce around,” he said. “They’d have a go-to destination.”Rosenbluth added that the same principle would apply for independent advisers, who increasingly choose between the two firms for clearing and trading services.“There’s scale benefits for them to provide,” he said.\--With assistance from Doug Alexander and Felice Maranz.To contact the reporters on this story: Annie Massa in New York at email@example.com;Matthew Monks in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Sam Mamudi at email@example.com, Alan MirabellaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- You have to hand it to Charles Schwab Corp. As the market leader in the online brokerage industry, the company seems to have realized the inevitable endgame of zero fees and consolidation and decided that it really ought to get on with it.Schwab, just seven weeks after rocking Wall Street by announcing plans to eliminate commissions for U.S. stocks, exchange-traded funds and options, is now set to buy rival TD Ameritrade Holding Corp. for $26 billion, according to reports Thursday. The combined company would have an impressive $5 trillion of assets and be better equipped to step forward into this new, no-fee world than competitors such as E*Trade Financial Corp. and Interactive Brokers Group Inc. The concept of a first-mover advantage usually applies to marketing, but it’s a relevant way to think about Schwab’s strategy, too. By staying ahead of the competition, Schwab is reshaping the discount brokerage space on its terms rather than waiting to react to any changes. Bloomberg News’s Annie Massa smartly broke down the various brokerage companies’ commissions as a percentage of net revenue in 2018, which makes it obvious why Schwab chose to take the plunge toward zero fees: It stands to reason that Schwab’s calculus went something like this:Yes, our stock price will take a big hit when we announce that we’re eliminating commissions (it did, dropping to the lowest since 2016 last month). But the short-term pain will be worth it because our rivals will have no choice but to follow suit (as they did within days). Because they depend on fees much more than we do, investors should sell our competitors’ shares to a greater extent (this happened, too). That will put us in a position to more cheaply execute the next phase of our plan, which is to grow. (It’s possible Schwab already had this deal in mind after TD Ameritrade announced in July that Chief Executive Officer Tim Hockey would leave by the end of February 2020.)Investors expressed approval of Schwab’s decision, lifting its shares as much as 13.9% on Thursday to the highest in more than a year. It’s not as if purchasing TD Ameritrade will solve all that ails the company and the online brokerage industry. But, like the consolidation in the mutual-fund space, it ensures survival. And in an era of rapid technological change on Wall Street, living to see another day and having the size and scope to keep pace with advancements is critically important. What’s next for Schwab? My Bloomberg Opinion colleague Nir Kaissar posited last month that the only option seems to be a more urgent push into financial advisory services. That will most likely be more of a grind for the company compared with the big splashes of the past two months. Schwab is competing with other market stalwarts like Fidelity Investments and Vanguard Group Inc., which are more difficult to push around than its discount broker rivals.Still, even if this is the last big move for now from Schwab, it has been a whirlwind couple of months. In two sweeping moves, the company has radically reshaped an industry and positioned itself to remain the market leader for the foreseeable future.To contact the author of this story: Brian Chappatta at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Charles Schwab Corp. is buying TD Ameritrade Holding Corp. for $26 billion, with a deal expected to be announced Thursday morning, Fox Business reports, citing unidentified people familiar with the situation.Shares in Charles Schwab reversed an earlier decline in pre-market trading and are up 2.4%, while TD Ameritrade reduced some of the earlier gains and is up 17%. Both companies didn’t immediately respond to emails and phone calls seeking comment.A deal would create a firm with roughly $5 trillion in combined assets, consolidating an industry under pressure from a price war that escalated when Schwab last month announced plans to eliminate commissions for U.S. stocks, exchange traded funds and options.The move forced other brokerages to follow suit and triggered a slump in the shares of such firms, with TD Ameritrade among the hardest hit.TD Ameritrade has lost 11% since then, valuing the company at $22 billion. Schwab gained 7% in the same period, giving it a stock market value of $57 billion.CNBC reported earlier the firms were in talks, with a deal likely as soon as today.(Updates with purchase price from new report.)To contact the reporters on this story: Katerina Petroff in Frankfurt at firstname.lastname@example.org;Sarah Jacob in Amsterdam at email@example.comTo contact the editors responsible for this story: Christopher Kingdon at firstname.lastname@example.org, Christian BaumgaertelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com – Wall Street was leery on Thursday after the South China Morning Post reported that upcoming trade tariffs on Chinese goods are likely to be delayed, even if Washington and Beijing fail to sign a deal by Dec. 15, when they are expected to take effect.
In the cut-throat world of discount brokerage, as in American football, the best defense is a good offense. Charles Schwab, America’s biggest listed online brokerage, is in talks to acquire rival TD Ameritrade for more than $25bn. Consolidation among discount stockbrokers and registered investment advisers should come as no surprise.
The combination between Schwab and TD Ameritrade, which could be announced as early as Thursday, would be the most striking response so far to the forces disrupting the brokerage industry. Walter Bettinger, chief executive of Schwab, is expected to run the combined company, one of the people added. TD Ameritrade’s chief executive Tim Hockey announced in the summer he would be stepping down in February 2020.