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TD Bank Group has announced plans to sell its entire 10.1% stake in The Charles Schwab Corporation through a registered offering and share repurchase by Schwab. TD currently holds 184.7 million Schwab shares.
Schwab has agreed to buy back US$1.5 billion of its shares from TD, conditional on completion of the offering. A preliminary prospectus supplement will be filed by Schwab with the SEC. TD Securities and Goldman Sachs are acting as joint bookrunners.
TD Group President and CEO Raymond Chun said: "As part of our strategic review, we have been evaluating capital allocation and have made the decision to exit our Schwab investment. We are very pleased with the strong return we are generating on the Schwab shares we acquired in 2020. We are confident in TD's growth opportunities and long-term potential, and we plan to use C$8 billion of the proceeds to repurchase our stock. We will invest the balance of the proceeds in our businesses to further support our customers and clients, drive performance and accelerate organic growth."
TD will continue its business relationship with Schwab through the Insured Deposit Account (IDA) Agreement. The bank said it will manage its capital prudently and strengthen its infrastructure.
TD Bank acquired its stake in Charles Schwab Corporation on October 6, 2020. This occurred as part of Schwab's acquisition of TD Ameritrade in an all-stock transaction valued at approximately $26 billion. As a result, TD Bank received a 13.5% ownership stake in Schwab, consisting of 9.9% voting common shares and the remainder in non-voting common shares convertible upon transfer to a third party.
Charles Schwab manages over $10 trillion in client assets and as of December 2023, employs around 33,000 people.
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