TD Ameritrade $4bil Purchase of Scottrade Not A Done Deal..Yet

td ameritrade-scottrade-brokerdealer

Broker-Dealer Consolidation Makes Sense, But TD Ameritrade Deal for Scottrade is Not A Done Deal..yet.

(Reuters) Oct 24-TD Ameritrade (AMTD.O) has agreed to buy Scottrade for $2.7 billion in a deal that would bring together two of the biggest U.S. discount brokerages, but is expected to face scrutiny from regulators. TD Ameritrade, the biggest U.S. discount brokerage by trade executions, said it would end up paying $2.7 billion for Scottrade’s brokerage business after the sale of Scottrade Bank to Toronto-Dominion Bank’s U.S. banking unit for $1.3 billion.

It is the latest in a wave of consolidation in an industry which has been grappling with intense competition and weak trading volumes as a result of small investors being drawn towards cheaper investment products that track major indexes.

E*Trade Financial Corp (ETFC.O), another discount broker, said in July that it would buy online brokerage OptionsHouse for $725 million, while Ally Financial Inc (ALLY.N) purchased TradeKing Group for about $275 million a month earlier.

In a connected deal, Toronto-Dominion Bank (TD.TO), TD Ameritrade’s biggest shareholder, said on Monday it had agreed to buy Scottrade’s banking business for $1.3 billion as it continues to ramp up its expansion in the United States.

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td ameritrade-scottrade-analysisTD Ameritrade’s acquisition of Scottrade combines two of the United States’ “big five brokerages”, the others being Charles Schwab, Fidelity Investments and E-Trade, and would leave only four major brokers operating in the marketplace.

“I think that the authorities in the United States are unlikely to let this pass without a pretty close look,” said John Briggs, an antitrust attorney with the law firm Axinn, Veltrop & Harkrider. “I think the transaction deserves scrutiny and will get scrutiny.”

TD Ameritrade’s CEO Tim Hockey said he believed regulators would look at the deal “fairly.”

“I still think this is a considerably competitive marketplace, that’s for sure. There are lots of opportunities for additional competitors to get into our space and continue to drive price competition,” he said.

The deal will produce a combined business with around 10 million client accounts and $1 trillion in assets, which will execute around 600,000 trades per day.

The purchase prices comprises $1.7 billion in cash and $1 billion in new shares. It will net a windfall for Scottrade’s co-founder and Chief Executive Rodger Riney, who set the company up in 1980. Riney, who said last year he was being treated for cancer, will join the TD Ameritrade board and also become TD Ameritrade’s fourth biggest shareholder.

TD Ameritrade, 42-percent owned by Toronto Dominion Bank, said it expected annual cost savings of $450 million as a result of the deal, with another $300 million of potential savings identified in the longer term.

As part of those plans, Hockey said around 25 percent of the combined business’s 600 branches will be closed. TD Ameritrade currently has 100 branches while Scottrade has 500. Hockey said in the interview the combined workforce of 10,000 will be reduced by about 20 percent.


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TD Ameritrade $2.7bil Purchase of Scottrade Not A Done Deal..Yet


Frmr Brokerage Industry Czar Goes Indie With Direct Approach to Film Finance-Veterans Get a Dividend

Brokerdealer turned Film Maker, Joe Ricketts

Brokerdealer turned Film Maker, Joe Ricketts blog update courtesy of 18 January New York Times article.

The former founder and Chairman of online brokerdealer Ameritrade Securities, Joe Ricketts, which since morphed through acquisition and is now known as TD Ameritrade, has a plan that only a creative finance industry czar could put together…and when it comes to creative financing, he’s found his calling in the film finance space.  As part of the marketing strategy, Joe Ricketts’ film, “Against the Sun”, a movie about World War II, will donate a matching amount from sales to veterans’ organizations.

Take a quiz about your open-sea survival skills on Buzzfeed. Score maybe 7 of 10, marking you as the type who might make it through a midocean disaster. And up pops an offer of, say, 30 percent off the standard $15 price to buy “Against the Sun,” a new feature film about real Navy fliers who spent 34 days adrift on the Pacific duringWorld War II.

Brutally direct digital sales techniques are standard stuff for e-commerce marketers offering credit cards, resort vacations, shoes or even books that match your presumed tastes or mood of the moment. But movie marketers have been slower to adopt contemporary online equivalents to the classic foot-in-the-door hard sell. Too slow, by the thinking of Joe Ricketts and his colleagues at his American Film Company.

Mr. Ricketts is an entrepreneur who learned a few things about salesmanship while building the TD Ameritrade online discount brokerage firm, of which he was chief executive. Now he has pointed the indie movie studio he founded toward an experiment in the use of low-cost digital marketing techniques to sell “Against the Sun.” The film is directed by Brian Falk, and it includes Tom Felton — Draco Malfoy in the “Harry Potter” series — among its stars.

Made for a little less than $5 million, “Against the Sun” will be shown in a small number of theaters and on a wide range of cable, satellite and digital on-demand services like iTunes, starting Jan. 23. And its relatively modest marketing budget, set initially at $2 million, will be overseen by DigitasLBi, a company that has run digital campaigns for companies like American Express but has virtually no film experience.

Joe Ricketts' new film will donated to veterans' organizations

Joe Ricketts’ new film will donated to veterans’ organizations

Mr. Ricketts wanted “a digital firm, ideally one that had never marketed a movie before,” said Alfred Levitt, chief operating officer of American Film.

Speaking jointly with George Hammer, a Digitas senior vice president who is coordinating the marketing effort for “Against the Sun,” Mr. Levitt described the sales campaign. It is intended to enhance the impact of dollars spent by focusing on transaction-ready buyers with an appetite for World War II dramas like “Unbroken,” “Fury” and “The Imitation Game.” Conventional studios recently spent tens of millions of marketing dollars on those films.

American Film struck a deal with Participant Media. Its website, which prods film viewers to social action, will offer “Against the Sun” with both a discount and a matching donation to a veterans’ organization, hoping to turn the socially committed into immediate buyers.

Advised of the donation plan, Lou Baczewski glanced at the online trailer and said he was ready to sign on.

A tightly networked history buff, Mr. Baczewski has written a book — “Louch: A Simple Man’s True Story of War, Survival, Life and Legacy” — about his grandfather’s experiences as a World War II tank driver, and he says he is planning to retrace a European invasion route by bike, to raise money for the Honor Flight Network and others.

Mr. Baczewski said he would happily spend money on the film if part of the profits were donated to veterans. “What better way to depict the struggles and battles of human endurance than by telling a true story?” he said.

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