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Charles Schwab to buy TD Ameritrade in $26 billion deal

Charles Schwab Corp. on Monday said it had reached an agreement to acquire rival discount broker TD Ameritrade Holdings Corp. in an all-stock deal valued at around $26 billion.

Shares of both companies jumped last week after reports they were in talks. The agreement would see TD Ameritrade AMTD, +3.20% stockholders receive 1.0837 Schwab shares for each TD Ameritrade share, representing a 17% premium over the 30-day volume-weighted average price exchange ratio as of Nov. 29. Schwab shares SCHW, -0.89% were off 0.9% in premarket action on Monday, while Ameritrade shares jumped more than 3%.

Barron’s on MarketWatch:What we all need to know about Schwab-Ameritrade deal

The combined company would serve 24 million client accounts with more than $5 trillion in client assets.

See:Schwab-TD Ameritrade tie-up means a wave of consolidation is afoot

The deal will give Toronto-Dominion Bank TD, +0.33% , which currently holds around 43% of TD Ameritrade’s common stock, a stake of around 13% in the combined company, with other TD Ameritrade stockholders and existing Schwab stockholders holding approximately 18% and 69%, respectively, the companies said. TD Bank’s voting stake will be capped at 9.9%, however, with the balance of its position held in a new, nonvoting class of Schwab common stock.

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Following the close of the transaction, TD Bank will have the right to fill two new seats on the Schwab board of directors while TD Ameritrade will name a single director, the companies said.