TD Ameritrade, TD Bank To Buy Scottrade In $4 Bln Cash, Stock Deal - Quick Facts

(RTTNews) - TD Ameritrade Holding Corp. (AMTD) and its largest stakeholder, Toronto-Dominion Bank or TD Bank (TD, TD.TO), announced Monday an agreement to acquire online brokerage Scottrade Financial Services Inc. in a cash and stock transaction valued at $4 billion.

The transaction will take place in two, concurrent steps. First, TD Bank will purchase Scottrade Bank from Scottrade Financial for $1.3 billion in cash consideration.

Under the terms of the proposed acquisition, Scottrade Bank will merge with and into TD Bank, N.A., an indirect unit of The Toronto-Dominion Bank. Additionally, TD will purchase $400 million in new common equity 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.

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.

TD Ameritrade 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.

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.

TD's purchase of Scottrade Bank is subject to the concurrent closing of the TD Ameritrade/ Scottrade transaction as well as receipt of regulatory approvals and satisfaction of other customary closing conditions, and is expected to close in the second half of fiscal 2017.