Charles Schwab to acquire TD Ameritrade for $26 billion

FXTM analyzed 70 M&A deals to show stock performance and GDP comps

Charles Schwab Corporation, one of the largest brokerage firms in the US, has set its sight on TD Ameritrade (TDA) in a potential $26 billion acquisition. When the news broke today, both companies saw their share prices go up (Charles Schwab went up by roughly +3.5%, while Ameritrade – by +7.0%).

According to press, the strategic move is not surprising, as Charles Schwab is making strides to rival with titans such as BlackRock. Even in October of this year, the company eliminated trading fees for ETFs and stocks.

If the acquisition goes through, the combined entity will be run by the CEO of Schwab – Walter Bettinger and the CFO of Ameritrade, Steve Boyle, will take charge of the target company until the deal is finalized.

The current CEO of TDA, Tim Hockey, announced earlier this year that he is to leave the firm by the end of February 2020. However, he already acknowledged the fact that the company’s decision to adopt zero commissions, just like Schwab and other competitors have already done, would predispose for merger talks in the future – a speculation that is now a fact.

In October, Schwab managed to eliminate the $4.95 trading fee. This year alone, the value of the company’s share price has increased by 7.8%, while the share price of TDA has decreased with around 16% overall. As press notes, the S&P 500 index gained a whopping 24% in the same period observed.

There is no clear indication as to what the next step will be, but if the deal goes through, Charles Schwab will be able to compete with some of its largest competitors in terms of market share (in revenue and customer sense).

More about Charles Schwab can be found here:

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