8-KLeadership ChangesAcquisitions & DispositionsFinancial Events+5

SCHWAB CHARLES CORP 8-K Report, Acquisition Completed (Oct 6, 2020)

Filed October 6, 2020For Securities:SCHWSCHW-PDSCHW-PJ

Summary

The Charles Schwab Corporation announced the successful completion of its acquisition of TD Ameritrade Holding Corporation on October 6, 2020. This significant merger, originally announced in November 2019, has now closed, integrating TD Ameritrade into Schwab as a wholly owned subsidiary. The transaction was an all-stock deal, where TD Ameritrade shareholders received 1.0837 shares of Schwab common stock for each share of TD Ameritrade common stock they held, with provisions for cash in lieu of fractional shares. The merger also involves specific arrangements for TD Bank, which received a combination of Schwab's voting and nonvoting common stock, capped at 9.9% of Schwab's total common stock. This report details the mechanics of the merger, including the conversion of equity awards and the appointment of new board members representing TD Ameritrade and TD Bank.

Key Highlights

  • 1The acquisition of TD Ameritrade by Charles Schwab has been completed as of October 6, 2020.
  • 2TD Ameritrade shareholders received 1.0837 shares of Schwab common stock per share of TD Ameritrade common stock.
  • 3Cash will be paid in lieu of any fractional shares issued in the merger.
  • 4TD Bank received a mix of Schwab voting and nonvoting common stock, subject to a 9.9% ownership cap.
  • 5Outstanding TD Ameritrade equity awards (stock options and RSUs) were assumed by Schwab and converted into equivalent Schwab awards.
  • 6Three new directors from TD Ameritrade and TD Bank have joined Schwab's Board of Directors.
  • 7Schwab has guaranteed TD Ameritrade's credit facility, indicating a direct financial obligation.

Frequently Asked Questions

The primary event reported is the completion of Charles Schwab's acquisition of TD Ameritrade Holding Corporation, which became effective on October 6, 2020.

TD Ameritrade shareholders received 1.0837 shares of Charles Schwab common stock for each share of TD Ameritrade common stock they owned. Cash was paid for any fractional shares that would have resulted from this exchange ratio.

Schwab Nonvoting Common Stock was issued as part of the merger consideration, primarily to TD Bank, to manage its ownership percentage and comply with regulatory or agreement-based limits. TD Bank received this type of stock for shares exceeding a 9.9% ownership cap of Schwab's total common stock.

Yes, Schwab entered into a guaranty supplement to guarantee TD Ameritrade's obligations under its existing $300,000,000 Credit Agreement. This represents a direct financial obligation for Schwab.