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Financial conglomerate Ally Financial said on Tuesday it has signed an agreement to acquire discount online brokerage company TradeKing Group, in line with its strategy to expand its portfolio with new services. Ally Financial will pay about $275 million for the deal, subject to certain purchase price adjustments, representing approximately $250 million in premium to the acquired net assets.
The deal is scheduled to be completed in the third quarter of 2016 once it receives regulatory approval by the US Financial Industry Regulatory Authority (FINRA). The acquisition deal includes an online broker/dealer, a digital portfolio management platform, and educational content and social collaboration channels.
“The addition of wealth management is the next key step in Ally’s digital product evolution and will create a powerful combination of segment-leading direct banking and innovative investment services in a single integrated customer experience. This transaction presents a compelling opportunity for customers and a logical growth opportunity for Ally,” said Ally CEO Jeffrey Brown. “The trend toward digitally-based financial services continues to gain momentum with consumers in general, and we see even greater opportunities ahead as the millennial generation begins to require a broader selection of financial products, including wealth management,” he added.
Once the acquisition is finalized, Ally Financials will add TradeKind’s client assets with an estimated value of about $4.5 billion. The amount consists of some $1.1 billion of cash and cash investments, 260,000 funded accounts and 20,000 daily average revenue trades (DARTs).
Ally Financial has also said it intends to include credit card and mortgage products to its Ally Bank banking franchise.
“[…] there is an opportunity to offer TradeKing clients competitive deposit products that can enhance their overall savings strategies, and we are optimistic about the future potential of the franchise we are building,” said Diane Morais, CEO and president of the Ally Bank subsidiary.
TradeKing partnered in the beginning of the year with Bank of America Merrill Lynch and Cooley LLP to find a buyer. At the time, the broker expected a potential deal to reach as much as $300 million. On its part, Ally Financial was advised on the deal by Goldman, Sachs & Co., Jarrett Lilien and Sullivan & Cromwell LLP.
Florida-based TradeKing has itself acquired several peers in the past few months, as a result of which its product portfolio has expanded. In November, the broker added features trading instruments to its portfolio after it finalized the acquisition of retail forex broker MB Trading.
TradeKing Group consists of online broker TradeKing Securities and its affiliate forex broker TradeKing Forex (an introducing broker to Gain Capital), investment advisor TradeKing Advisors, and TKconnect, which provides educational content and social collaboration channels.
Florida-based Ally Financial is a financial holding company with operations in consumer financing, leasing, vehicle service contracts, commercial loans and vehicle remarketing services, as well as a variety of insurance offerings, including inventory insurance, insurance consultative services for dealers and other ancillary products. Its assets amounted to about $158.6 billion at end-2015.