TD Ameritrade Holding Corporation (Nasdaq: AMTD), parent of one of the five active forex brokers on the US market – TD Ameritrade Futures & Forex LLC – made two major announcements this Monday.
First the corporation announced it has entered into a definitive agreement to acquire Scottrade Financial Services for $4 billion, thus combining two leaders in the retail market for stocks. The other was the report of record earnings for the fiscal 2016 per diluted share on net income of $842 million and record net revenue of $3.3 billion.
For TD Ameritrade, which as of the end of September has client assets worth $744 billion (up 16% year over year), the purchase of Scottrade adds significant scale to its retail business, because Scottrade, however with only $170 billion in client assets, has a much larger network of retail branches. According to The Wall Street Journal, TD Ameritrade had about 100 branches at the end of September while Scottrade had roughly 500. The combined company will have about 450.
TD Ameritrade says it also expects the deal to improve the education solutions of the new company, to offer more sophisticated trading platforms and advanced mobile trading technology, as well as access to more diverse products, like complex options, futures and forex, goal planning services and “robo” trading advice.
“For more than 40 years, TD Ameritrade has been committed to breaking down the barriers that stand between American investors and Wall Street. That means delivering an investing experience grounded in technology and innovation that educates and enables investors with all levels of ability and wealth to work toward their financial goals,” said Tim Hockey, TD Ameritrade president and chief executive officer. “We’ve found in Scottrade a partner with an equally-strong passion and a proven track record for delivering exceptional client experiences. This combination will allow us to leverage our strengths and increase our scale, further accelerate our asset gathering capabilities and introduce our award-winning line-up of trading tools, products and education services to millions of new investors.”