TD Ameritrade to buy Scottrade in $4B cash-and-stock deal

FILE - In this July 18, 2010, file photo, a TD Ameritrade logo is displayed on the office in Omaha, Neb. Online brokerage TD Ameritrade is buying Scottrade Financial Services Inc., announced Monday, Oct. 24, 2016, in a cash-and-stock deal valued at about $4 billion, which will help bolster its retail business and more than quadruple the size of its branch network. (AP Photo/Nati Harnik, File)
FILE - In this July 18, 2010, file photo, a TD Ameritrade logo is displayed on the office in Omaha, Neb. Online brokerage TD Ameritrade is buying Scottrade Financial Services Inc., announced Monday, Oct. 24, 2016, in a cash-and-stock deal valued at about $4 billion, which will help bolster its retail business and more than quadruple the size of its branch network. (AP Photo/Nati Harnik, File)

NEW YORK (AP) — Online brokerage TD Ameritrade is buying Scottrade in a $4 billion cash-and-stock deal that would tie up two major players in the day trading industry during an era when an increasingly large number of investors are choosing index funds over stock picking.

In the two-stage deal announced Monday, TD Bank Group will buy Scottrade Bank from Scottrade Financial Services Inc. for $1.3 billion in cash. Scottrade Bank will be folded into TD Bank and it will buy 11 million shares from TD Ameritrade for $400 million. Then, TD Ameritrade will buy Scottrade Financial Services for $4 billion.

TD Ameritrade said that the transaction adds significant scale to its retail business and more than quadruples the size of its branch network. It anticipates about $450 million in combined annual expense savings.

Combined, TD Ameritrade and Scottrade had $944 billion in total client assets and 600,000 average client trades per day for the year ended Sept. 30, on a pro forma basis.

Scottrade founder and CEO Rodger Riney will join TD Ameritrade’s board.

The deal is targeted to close by Sept. 30, 2017.

Shares of TD Ameritrade Holding Corp. slipped 3 cents to $37.05 before the market open Monday.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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