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DOJ OKs Schwab-TD Merger, Shareholders of Both Firms Approve Deal

By Alex Padalka June 5, 2020

Charles Schwab says the Department of Justice has closed its investigation of its planned acquisition of TD Ameritrade. Schwab and TD Ameritrade’s stockholders have approved the deal as well, the companies say.

The DOJ’s Antitrust Division told Schwab on June 3 that it decided to close its investigation of the proposed merger, according to a press release from Schwab. And on June 4, both Schwab and TD Ameritrade’s shareholders approved the acquisition as well, the companies say in separate press releases. 

In January, the DOJ had embarked on a second review of the planned deal, as reported. 

The deal, which the companies announced in November, is valued at around $26 billion, with TD Ameritrade stockholders due to receive Schwab shares in exchange for their TD Ameritrade shares at a 17% premium over the 30-day volume weighted average price exchange ratio as of Nov. 20, 2019. The merger will create an entity with more than $5 trillion in client assets in 24 million brokerage accounts, the companies said at the time.

“The combination will generate substantial long-term value for Schwab’s stockholders and bring together two leading firms with proud and similar histories of making investing more accessible to all,” Schwab president and CEO Walt Bettinger says in a statement. “Together, with a focus on low cost, great service and technology, we will form a company that is uniquely positioned to serve the investment, trading and wealth management needs of investors — and the advisors who serve them — in every phase of their financial journey.”

Completion of the deal is still subject to other regulatory approvals but the companies still expect it to close in the second half of 2020, Schwab says. The companies expect integration to take place between 18 and 36 months following the close, TD Ameritrade says.

Last month, Schwab disclosed that the merger could be delayed by three years if the courts decide the claims in a lawsuit filed May 12 before the Delaware Court of Chancery on May by Brett Hawkes, who was a shareholder of TD Ameritrade when the merger was announced in November 12, is valid. But Schwab said in the SEC filing that a majority approval would supersede the violation alleged in the suit, as reported.

TD Ameritrade says more than 99% of the votes cast by its shareholders voted in favor of the proposal. Schwab says more than 99% of the shares cast by its shareholders were voted in favor of a proposal to issue new Schwab common shares to TD Ameritrade stockholders as consideration for the acquisition.

Meanwhile, plaintiffs in eight other complaints challenging the merger already agreed to dismiss their claims, according to May 27 SEC filings from both TD Ameritrade and Schwab.

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