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TD
Ameritrade, the biggest U.S. discount brokerage by trade
executions, said it would end up paying $2.7 billion for
Scottrade's brokerage business after the sale of Scottrade Bank
to Toronto-Dominion Bank's U.S. banking unit for $1.3 billion.
The $2.7 billion comprises $1 billion in new common TD
Ameritrade shares and $1.7 billion in cash.
The deal comes at time when discount brokerages are facing weak
trading volumes and slow revenue growth as wealth managers cut
fees amid intense competition.
Rodger Riney, who founded Scottrade and is the company's CEO and
controlling shareholder, will join TD Ameritrade's board after
the close of the deal, the companies said. Riney said last year
he was being treated for a form of blood cancer.
TD Ameritrade, which is 42 percent owned by Toronto Dominion
Bank, said it expected to save about $450 million annually in
combined expenses and more than $300 million in "additional
longer-term opportunities" once the deal closes.
The deal is expected to close by Sept. 30, 2017, the companies
said.
Barclays Capital Inc is financial adviser to TD Ameritrade,
while Wachtell, Lipton, Rosen & Katz is legal adviser. Goldman
Sachs & Co is advising Scottrade, with Sullivan & Cromwell
acting as legal adviser.
(Reporting by Sruthi Shankar and Richa Naidu in Bengaluru;
Editing by Sriraj Kalluvila and Ted Kerr)
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