Sch­wab scoops up ri­val for $26B

Times-Herald (Vallejo) - - NEWS - By Stan Choe

NEW YORK >> Charles Sch­wab is buy­ing ri­val TD Amer­i­trade in a $26 bil­lion stock swap, a block­buster agree­ment brought about by mas­sive dis­rup­tion in the on­line brokerage in­dus­try.

Bow­ing to com­pet­i­tive pres­sure, bro­ker­ages have made it free for cus­tomers to trade U.S. stocks on­line. A com­bi­na­tion of two of the big­gest play­ers in the in­dus­try would al­low Sch­wab to save bil­lions of dol­lars and make up for rev­enue lost from no longer charg­ing in­vestors such com­mis­sions.

The tie-up cre­ates a com­pany so big, how­ever, that it may draw scru­tiny from an­titrust reg­u­la­tors. The com­bined com­pany would have more than $5 tril­lion in client as­sets un­der man­age­ment.

“With this trans­ac­tion, we will cap­i­tal­ize on the unique op­por­tu­nity to build a firm with the soul of a chal­lenger and the re­sources of a large fi­nan­cial ser­vices in­sti­tu­tion that will be uniquely po­si­tioned to serve the in­vest­ment, trad­ing and wealth man­age­ment needs of in­vestors across ev­ery phase of their fi­nan­cial jour­neys,” Sch­wab CEO Walt Bet­tinger said Mon­day in a pre­pared state­ment.

The trans­ac­tion would give Sch­wab an ad­di­tional 12 mil­lion client ac­counts, $1.3 tril­lion in client as­sets and ap­prox­i­mately $5 bil­lion in an­nual rev­enue. The com­bined com­pany is ex­pected to con­trol 24 mil­lion client ac­counts.

By it­self, Sch­wab con­trols roughly half the mar­ket for hold­ing money man­aged by and pro­vid­ing other ser­vices to reg­is­tered in­vest­ment ad­vis­ers, ac­cord­ing to es­ti­mates by Kyle Voigt, an an­a­lyst with Keefe, Bruyette & Woods. TD Amer­i­trade may con­trol about 15% to 20%,

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