Charles Schwab And TD Ameritrade: The Ambitious $28 Billion Integration

By Amit Chowdhry ● Dec 14, 2019
  • Charles Schwab and TD Ameritrade are merging in a $28 billion deal. And it has one of the most ambitious integration plans. Here are the details.

One of the biggest deals this year is Charles Schwab buying TD Ameritrade for $28 billion. Now there is a lot of work to be done for merging the two massive financial operations. After Schwab and TD Ameritrade merge, the combined company will have over $5 trillion in client assets and 24 million accounts.

The merger announcement came at the heels of all of the major brokerages eliminating commission fees. 

“We’re on offense,” said Charles Schwab President & CEO Walt Bettinger during a call about the deal via S&P Global Intelligence. “Although the way this all played out wasn’t necessarily planned to come out this way, we think that it worked out well ultimately for the consumer, for the clients that we serve as well as for the stockholders.”

The deal is expected to close in the second half of 2020 following pending shareholder and regulatory approvals. And analysts are speculating that the merger may be scrutinized by the Justice Department. But analysts believe that the merger would eventually be approved. Once the deal closes, then the integration is expected to take up to 3 years.

At $30 billion, this is one of Schwab’s largest deals ever. The company’s next biggest deal is its $1.8 billion acquisition of USAA’s investment management assets. This deal is expected to close before the integration of TD Ameritrade begins.

“Schwab has never done a deal of this scale before,” said UBS senior analyst Brennan Hawken in an interview with S&P Global. “In fact, they really don’t have much history as a scale acquirer.”

Schwab COO Joe Martinetto pointed out that the integration is intended to be lengthy in order to be careful. And Martinetto will be working closely with Charles Schwab chief financial officer Peter Crawford during this process.

The TD Ameritrade deal actually came as a surprise to analysts as the USAA integration was still happening.

“When they did the USAA deal, I thought they were getting in the batting cage. They realized they needed practice,” Hawken added. “I didn’t think they would step into the batting cage and then decide to tear (it) away and start taking live pitches.”

Earlier this month, Schwab said it hired former TD Ameritrade executive Tom Bradley as a senior vice president in adviser services as part of the integration. Bradley is going to report to Schwab Advisor Services head Bernie Clark.