MONEY

TD Ameritrade to acquire Scottrade for $4B

Nathan Bomey
USA TODAY

TD Ameritrade reached a deal to acquire rival stock brokerage firm Scottrade for a mix of cash and stock that the companies said was worth $4 billion.

TD Ameritrade's headquarters in Omaha, Ne.

The agreement involves multiple transactions in which TD Ameritrade will first acquire Scottrade Bank for $1.3 billion, then acquire Scottrade Financial Services for $2.7 billion.

Collectively, the companies handled an average of 600,000 client trades per day, $944 billion in client assets and 10 million funded client accounts in the 12 months ended Sept. 30.

TD Ameritrade said the deal "adds significant scale to its retail business, extends its leadership in trading and more than quadruples the size of its branch network."

The companies are expected to make significant cuts, including shuttering about 150 of their collective 600 branches, according to a presentation prepared for investors.

To squeeze out excess costs, they'll rack up $550 million in "restructuring related charges," including costs associated with employee severance, according to the presentation.

The company said it had identified the opportunity for $450 million in annual "expense synergies," which often includes cost cuts and combined purchasing power in corporate mergers, including 25% that can be achieved within the first year of the deal. The rest would occur in the second year.

TD Ameritrade said it expects an additional $300 million in "longer-term opportunities," without offering specifics.

The companies said they expect the deal to close by the end of September 2017.

TD Ameritrade shares (AMTD) fell 3.3% in late-afternoon trading to $35.85.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.