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Jun 4, 2020

Schwab's deal for TD Ameritrade wins antitrust approval

Charles Schwab to buy TD Ameritrade for US$26 billion in all-stock deal

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Charles Schwab Corp. won U.S. antitrust approval to buy rival TD Ameritrade Holding Corp., a US$26 billion deal that further consolidates the brokerage industry.

Schwab said Thursday that the Justice Department approved the deal, which the company expects to close in the second half of the year.

Schwab estimates that integrating the businesses will take between 18 and 36 months following the close, it said.

The tie-up tightens Schwab’s grip on an industry it pioneered.

The deal, which was announced in November, came after Schwab cut its trading commissions to zero, in a move that roiled the entire sector.

The combination shows the rush to consolidate customers in an industry that’s become more competitive over time. Besides wiping out commissions, prices for investment products and advice are coming down.

Schwab’s shares rose as much as 2.5 per cent in early trading in New York Thursday, and were up 0.7 per cent at 9:58 a.m. TD Ameritrade’s stock gained 3.8 per cent, having earlier risen as much as 5.5 per cent.

Still, the deal intensifies concentration in the industry.

Smaller competitor E*Trade Financial Corp. sold itself to Morgan Stanley in February, marking the end of an era for standalone discount brokerages.

That deal won antitrust approval from the Justice Department in March.

The TD Ameritrade deal initially raised some antitrust concerns because it advances Schwab’s leading position as custodian for assets managed by financial advisers.

The Justice Department didn’t respond to a request for comment.

CNBC reported earlier the deal had won antitrust approval.