TD Bank Group announced Monday that it plans to sell its entire equity investment in The Charles Schwab Corporation through a registered offering and share repurchase by Schwab.
TD Bank to Sell Charles Schwab Stake
Despite exiting its ownership position, TD said it will maintain a business relationship with Schwab via the Insured Deposit Account (IDA) Agreement.
TD currently holds 184.7 million Schwab shares, representing 10.1% economic ownership. As part of the transaction, Schwab has agreed to repurchase US$1.5 billion worth of its shares from TD, conditional on the completion of the offering.
The sale will be executed through a secondary offering, with TD Securities and Goldman Sachs acting as joint bookrunning managers.
Raymond Chun, Group President and CEO of TD Bank Group, explained the rationale behind the move: “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.”
TD plans to allocate C$8 billion of the proceeds toward a share repurchase programme, with the remaining funds reinvested into business operations to drive growth and performance. The bank said it will provide further details on its capital strategy in an investor call scheduled for tomorrow.
Chun added that they are confident in TD’s growth opportunities and long-term potential. “We will invest the balance of the proceeds in our businesses to further support our customers and clients, drive performance and accelerate organic growth,” he stated.
