It also gives Toronto-based Dominion Bank, TD Ameritrade's largest stakeholder, larger U.S. banking operations.
Riney, owner of closely held Scottrade Financial Services Inc., will be ranked on the Bloomberg Billionaires Index with a $4 billion net worth after the company agreed to be purchased by competitors TD Ameritrade Holding Corp. and Toronto-Dominion Bank. The combined company will have about 450.
The purchase of Scottrade by TD Ameritrade, which is subject to approval by U.S. regulators, will produce a combined business with around 10 million client accounts and US$1 trillion in assets, which will execute around 600,000 trades per day.
As a result of the transaction, TD Ameritrade will accelerate its latest earnings release.
Scottrade has about 3,700 employees in about 500 branches across the United States.
OMAHA, Neb. (AP) - Online brokerage TD Ameritrade is buying Scottrade in a $4 billion cash-and-stock deal that would significantly expand its branch network at a time when many financial firms are expanding automated adviser programs. "With that scale, those investments in technology will be spread over more clients".
The US$2.7 billion TD Ameritrade is paying for Scottrade's brokerage business comprises US$1 billion in new common TD Ameritrade shares and US$1.7 billion in cash.
$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).
We've found in Scottrade a partner with an equally-strong passion and a proven track record for delivering exceptional client experiences.
The companies are expected to make significant cuts, including shuttering about 150 of their collective 600 branches, according to a presentation prepared for investors. One reason the company may have been on the block, the 70-year-old Riney was diagnosed with cancer last year.
The Canadian bank's closely watched capital measure, the CET1 ratio, is projected to decrease by 30 basis points from where it sits 10.4 per cent as a result of the transaction.
The deal is expected to close by September 30, 2017, the companies said. Goldman, Sachs & Co.is serving as financial advisor to Scottrade, and Sullivan & Cromwell is serving as legal advisor to Scottrade.