Transaction adds scale and solidifies TD
Ameritrade’s leadership position
12-15% EPS accretion expected in Years 2 and 3
(GAAP basis),3 15-20% on an adjusted basis4
Enables delivery of broader trading and
investing experience to 3.1 million client accounts
Significantly expands service and distribution
footprint, further accelerating asset gathering capabilities
Scottrade Founder and CEO Rodger Riney to
receive seat on TD Ameritrade Board of Directors
Conference Call with management today at 8:30 a.m. EDT
TD Ameritrade Holding Corporation (Nasdaq: AMTD) and Scottrade
Financial Services, Inc. today announced that they have entered
into a definitive agreement for TD Ameritrade to acquire Scottrade
in a cash and stock transaction valued at $4 billion.1
The transaction combines two highly complementary organizations
with long histories of helping millions of people invest in their
financial futures. For TD Ameritrade, the transaction adds
significant scale to its retail business, extends its leadership in
trading, and more than quadruples the size of its branch
network.
The company expects to realize approximately $450 million in
combined annual expense synergies, and more than $300 million in
additional longer-term opportunities. The first 25 percent of the
expense synergies are expected to be realized in Year 1 post-close
and the remainder realized in Year 2. Furthermore, the transaction
is expected to generate double-digit EPS accretion
post-conversion.
Terms of the Deal
The transaction, which has been approved by the boards of
directors of TD Ameritrade, TD Bank Group (TD) and Scottrade, will
take place in two, concurrent steps. First, TD will purchase
Scottrade Bank from Scottrade Financial Services, Inc. for $1.3
billion in cash consideration.2 Under the terms of the proposed
acquisition, Scottrade Bank will merge with and into TD Bank, N.A.,
an indirect wholly-owned subsidiary of The Toronto-Dominion Bank.
Additionally, TD will purchase $400 million in new common equity
(11 million shares) from TD Ameritrade in connection with the
proposed transaction, pursuant to its preemptive rights.
Then, immediately following that acquisition, TD Ameritrade will
acquire Scottrade Financial Services, Inc., for $4 billion, or $2.7
billion net of the proceeds from the sale of Scottrade Bank.
The $2.7 billion will be comprised of: 3
- $1.0 billion in new common equity (28
million shares) issued to Scottrade shareholders; and
- $1.7 billion in cash, which includes TD
Ameritrade cash ($900 million), a new debt offering ($400 million),
and the proceeds from the sale of 11 million shares to TD ($400
million).
Additionally, following the transaction’s close, Scottrade
Founder and CEO Rodger Riney will be appointed to the TD Ameritrade
Board of Directors.
Following this transaction, the company expects to maintain
strong free cash flow.
Operational Highlights
For the 12 months ended Sept. 30, 2016, TD Ameritrade and
Scottrade, on a pro-forma combined basis, had:
- 600,000 average client trades per
day
- $944 billion in total client
assets
- 10 million funded client accounts
- $14 billion in margin balances
- $149 billion in cash balances
Impact on Growth Strategy
Scottrade has built a strong reputation for outstanding client
service. This year clients ranked the brokerage “Highest in
Investor Satisfaction with Self-Directed Services” in the J.D.
Power 2016 U.S. Self-Directed Investor Satisfaction StudySM.5 With
a network of nearly 500 branches employing more than 1,000
investment consultants, the transaction will significantly expand
TD Ameritrade’s distribution channels and further accelerate its
asset gathering capabilities.
Furthermore, with more than 3 million client accounts and $170
billion in assets under management, Scottrade represents a unique
opportunity to acquire scale and an audience of retail investors
that will benefit from TD Ameritrade’s broader service offering,
which includes:
- Deeper investor education
solutions
- Sophisticated trading platforms and
advanced mobile trading technology
- Access to more diverse products, like
complex options, futures and foreign exchange
- Access to more investment guidance and
advice solutions, like goal planning services, “robo” advice, and
the company’s Amerivest managed portfolios.
“For more than 40 years, TD Ameritrade has been committed to
breaking down the barriers that stand between American investors
and Wall Street. That means delivering an investing experience
grounded in technology and innovation that educates and enables
investors with all levels of ability and wealth to work toward
their financial goals,” said Tim Hockey, TD Ameritrade president
and chief executive officer. “We’ve found in Scottrade a partner
with an equally-strong passion and a proven track record for
delivering exceptional client experiences. This combination will
allow us to leverage our strengths and increase our scale, further
accelerate our asset gathering capabilities and introduce our
award-winning line-up of trading tools, products and education
services to millions of new investors.”
“Since founding Scottrade in 1980, our mission has been to lower
the cost of investing and trading while treating clients fairly and
honestly. Over the last 36 years, thanks to the tireless efforts of
our talented associates, we have expanded our services and evolved
the business while maintaining our commitment to helping people
overcome barriers to financial success,” said Rodger Riney,
Scottrade founder and chief executive officer. “We are confident we
have found a great partner in TD Ameritrade, who shares our
client-first focus. Joining forces will enable us to offer clients
an expanded array of trading tools, enhanced education resources
and advanced option capabilities with broader geographic reach.
Together, we will be well-positioned to compete in today’s rapidly
evolving financial services industry.”
The transaction is subject to regulatory approval and customary
closing conditions. The parties expect it to close by Sept. 30,
2017, with an anticipated clearing conversion to TD Ameritrade
systems in 2018.
Barclays Capital Inc. is serving as financial advisor to TD
Ameritrade, and Wachtell, Lipton, Rosen & Katz is serving as
legal advisor to TD Ameritrade. Goldman, Sachs & Co. is serving
as financial advisor to Scottrade, and Sullivan & Cromwell is
serving as legal advisor to Scottrade.
Conference Call and Webcast
TD Ameritrade will host a conference call and webcast for
shareholders, analysts and media this morning, Oct. 24, 2016, at
8:30 a.m. EDT/7:30 a.m. CDT to discuss this announcement. The call
will feature comments from Mr. Hockey, as well as Steve Boyle, the
company’s executive vice president and chief financial officer.
Change to Quarterly Earnings Disclosure
In light of this announcement, the company has decided to
expedite the release of its financial results for its fourth fiscal
quarter and the full 2016 fiscal year. Earnings results will be
issued via press release at approximately 6:30 a.m. EDT/5:30 a.m.
CDT today, Oct. 24, 2016. Both Mr. Hockey and Mr. Boyle will
address these results as part of today’s presentation.
As is the company’s custom, this morning’s presentation will be
posted to the “Presentations & Events” page of www.amtd.com
ahead of the conference call.
The company asks that interested parties visit or subscribe to
newsfeeds at www.amtd.com for the most up-to-date corporate
financial information, presentation announcements, transcripts and
archives. The company also communicates this information via
Twitter, @TDAmeritradePR. Web site links, corporate titles and
telephone numbers provided in this release may change in the
future.
Conference Call Details:
- Participants may listen to the
conference call by dialing 877-648-7976.
- A replay of the phone call will be
available by dialing 855-859-2056 and entering the Conference ID
69450485 beginning at 12:00 p.m. EDT (11:00 a.m. CDT) on Oct. 24,
2016. The replay will be available until 11:59 p.m. EDT (10:59 p.m.
CDT) on Oct. 31, 2016.
- A transcript of the call will be
available on the Company’s corporate web site, www.amtd.com, via
the “Investor Relations” page or the “Presentations & Events”
page beginning Tuesday, Oct. 25, 2016.
Webcast Details:
• The Company will webcast the conference call through
www.amtd.com, via the “Presentations
& Events” page of the web site.
• The webcast will open to attendees 15 minutes before
the conference call begins, or at approximately 8:15 a.m. EDT (7:15
a.m. CDT).
• An archived version of the webcast will be available online
beginning at approximately 12:00 p.m. EDT (11:00 a.m. CDT) on Oct.
24, 2016.
More information about this transaction is available at
http://www.amtd.com/scottrade.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment
advisors (RIAs) have turned to TD Ameritrade’s (Nasdaq: AMTD)
technology, people and education to help make investing and trading
easier to understand and do. Online or over the phone. In a branch
or with an independent RIA. First-timer or sophisticated trader.
Our clients want to take control, and we help them decide how -
bringing Wall Street to Main Street for more than 40 years. An
official sponsor of the 2016 U.S. Olympic Team and an official
sponsor of the National Football League, TD Ameritrade has
time and again been recognized as a leader in investment services.
Please visit TD Ameritrade’s newsroom or www.amtd.com for more
information, or read our stories at
http://freshaccounts.amtd.com.
Brokerage services provided by TD Ameritrade, Inc., member
FINRA (www.FINRA.org)/SIPC (www.SIPC.org)
About Scottrade Financial Services, Inc.
Scottrade Financial Services, Inc. is a privately-held financial
services firm with four key lines of business: Scottrade, Inc., a
leading brokerage company; Scottrade® Advisor Services, a division
of Scottrade, Inc., which serves registered investment advisors;
Scottrade Bank, a provider of online retail banking products and
services, commercial lending and commercial equipment financing;
and Scottrade Investment Management, providing investment guidance
services. Scottrade, Inc. works with more than three million retail
clients to provide the trading services and investment solutions
they need to overcome barriers to financial success. Scottrade
pairs its large nationwide branch network with advanced online
products and services to help clients gain insight into the market
and react quickly to trading opportunities. Scottrade Financial
Services, Inc. is based in St. Louis, Mo. For more information,
visit about.scottrade.com or www.scottrade.com.
Brokerage services provided by Scottrade, Inc., member FINRA
(www.FINRA.org)/SIPC (www.SIPC.org).
Forward-looking Statements
This document contains forward-looking statements within the
meaning of the federal securities laws, including the Private
Securities Litigation Reform Act of 1995, including statements
giving expectations or predictions of future financial or business
performance or conditions. We intend these forward-looking
statements to be covered by the safe harbor provisions of the
federal securities laws. Forward-looking statements are typically
identified by words such as “believe,” “expect,” “anticipate,”
“intend,” “target,” “estimate,” “continue,” “positions,”
“prospects” or “potential,” by future conditional verbs such as
“will,” “would,” “should,” “could” or “may”, or by variations of
such words or by similar expressions.
In particular, any projections or expectations regarding the
proposed business combination transaction between TD Ameritrade
Holding Corporation (“TD Ameritrade”) and Scottrade Financial
Services, Inc. (“Scottrade”) described herein, our future revenues,
expenses, earnings, capital expenditures, effective tax rates,
client trading activity, accounts or stock price, as well as the
assumptions on which such expectations are based, are
forward-looking statements. These statements reflect only our
current expectations and are not guarantees of future performance
or results. These statements involve risks, uncertainties and
assumptions that change over time and could cause actual results or
performance to differ materially from those contained in the
forward- looking statements and historical performance. In addition
to the risks, uncertainties and assumptions previously disclosed in
TD Ameritrade’s reports and documents filed with the Securities and
Exchange Commission (“SEC”) and those identified elsewhere in this
communication, these risks, uncertainties and assumptions include,
but are not limited to: the ability to obtain regulatory approvals
and meet other closing conditions to the proposed transaction,
including the completion of the merger between Scottrade Bank and
TD Bank, N.A., on the expected terms and schedule; delay in closing
the transaction; difficulties and delays in integrating the TD
Ameritrade and Scottrade businesses or fully realizing cost savings
and other benefits; business disruption following the proposed
transaction; changes in asset quality and credit risk; the
inability to sustain revenue and earnings growth; changes in
interest rates and capital markets; inflation; customer borrowing,
repayment, investment and deposit practices; customer
disintermediation; the introduction, withdrawal, success and timing
of business initiatives; competitive conditions; TD Ameritrade’s
and Scottrade’s businesses experiencing disruptions due to
transaction-related uncertainty or other factors making it more
difficult to maintain relationships with employees, customers,
other business partners or governmental entities; the inability to
realize synergies or to implement integration plans and other
consequences associated with mergers, acquisitions and
divestitures; economic conditions; and the impact, extent and
timing of technological changes, capital management activities, and
other actions of regulatory bodies and legislative and regulatory
actions and reforms, general economic and political conditions and
other securities industry risks, fluctuations in interest rates,
stock market fluctuations and changes in client trading activity,
credit risk with clients and counterparties, increased competition,
systems failures, delays and capacity constraints, network security
risks, liquidity risks, new laws and regulations affecting our
businesses, regulatory and legal matters and uncertainties and
other risk factors described in our latest Annual Report on Form
10-K, filed with the SEC on Nov. 20, 2015 and our subsequent
Quarterly Reports on Form 10-Q filed thereafter and other reports
and documents we file with the SEC. Annualized, pro forma,
projected and estimated numbers are used for illustrative purpose
only, are not forecasts and may not reflect actual results.
These forward-looking statements are subject to numerous
assumptions, risks and uncertainties which change over time and
speak only as of the date on which the statements were made. We
undertake no obligation to update or revise publicly any forward-
looking statements, whether as a result of new information, future
events or otherwise, except to the extent required by the federal
securities laws.
(1) Purchase price for Scottrade Financial Services, Inc. is
subject to closing adjustments.
(2) Purchase price for Scottrade Bank is based on Scottrade Bank
tangible book value adjusted at closing; Scottrade Bank tangible
book value was $1.3 billion as of 9/30/16.
(3) Equity issuance is calculated based on closing share price
of $36.12 as of 10/7/16. The issuance to TD Bank Group is made
pursuant to its contractual rights under the company’s stockholder
agreement.
(4) Accretion/(dilution) on an adjusted basis excludes current
deal client intangible amortization expense.
(5) Scottrade received the highest numerical score in the J.D.
Power 2016 Self-Directed Investor Satisfaction Study, based on
4,242 responses measuring 13 firms and the experiences and
perceptions of investors who use self-directed investment firms,
surveyed in January 2016. Your experiences may vary. Visit
jdpower.com.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161024005562/en/
For Media:TD AmeritradeKim Hillyer, 402-574-6523Director,
Communications & Public
Affairskim.hillyer@tdameritrade.com@TDAmeritradePRorScottradeShea
Leordeanu, 314-965-1555 x3909Vice President, Public
Relationssleordeanu@scottrade.comFor AMTD Stockholders:TD
AmeritradeJeff Goeser, 402-597-8464Director, Investor Relations
& Financejeffrey.goeser@tdameritrade.com
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