(26 November 2019)DAILY MARKET BRIEF 2:Charles Schwab and TD Ameritrade Announced a $26 Billion Merger

Charles Schwab and TD Ameritrade made it official: The companies announced plans to merge, with Schwab buying TD in an all-stock transaction that values TD at $26 billion, confirming reports from last week. TD shareholders would receive 1.0837 Schwab shares for each TD share, a 17% premium over the 30-day average price that the stocks traded at before news of the deal broke on November 20. The companies expect the deal to close in the second half of 2020 and said it would boost earnings per share in the third year after closing by 10-15%. Much of that will come from $1.8 to $2 billion in cost savings as Schwab and TD integrate operations, representing about 20% of the combined company's cost base. Canada's Toronto-Dominion Bank owns 43% of Ameritrade's common stock and it would retain 13% in the combined company, though TD Bank's voting stake would be capped at 9.9%. TD and Schwab also renegotiated a new 10-year deposit agreement with TD entitled to a servicing fee on cash balances held by TD Ameritrade customers, though that fee will be reduced by 0.10%, the companies said.

.By Vincent Mivelaz