XLF, Banking and Financial Sector Stocks: Schwab to Acquire U.S. Trust
- JenL_2
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» JenL_2 - Schwab to Acquire U.S. Trust
And the Mergers Begin. This from 1/13 WSJ:Schwab Plans to Acquire U.S. Trust In Stock Deal Valued at $2.7 Billion
Leading online and discount broker Charles Schwab Corp. agreed Thursday to acquire U.S. Trust Corp. in a transaction valued at $2.7 billion.
Schwab, San Francisco, said the acquisition would bolster its offerings for affluent investors, broadening its product line to include both beginning investors as well as individuals with substantial accumulated wealth.
Schwab said it will exchange 3.427 of its shares for each share of U.S. Trust. The offer values each U.S. Trust share at $129, representing a 63% premium based on Schwab's closing stock price Wednesday. U.S. Trust closed Wednesday at $78.875.
U.S. Trust provides investment management and consulting, fiduciary services, financial and estate planning and private banking. Based in New York City, the company has 24 offices nationwide and 1,900 employees. As of Dec. 31, U.S. Trust had $86 billion of assets under management.
U.S. Trust Chairman and Chief Executive H. Marshall Schwarz and President and Chief Operating Officer Jeffrey S. Maurer will join the Schwab board. Both will maintain their current titles.
Schwab Chairman and Co-Chief Executive Charles R. Schwab and President and Co-Chief Executive David Pottruck will join the U.S. Trust board, which will remain in place.
Both Schwab and U.S. Trust will keep their separate brand identities, but will sharing certain functions across their complementary business lines. The companies said they expect the deal to close by July.
Schwab said it expects to become a financial holding company under the Financial Services Reform Act of 1999, which cleared the way for banks, insurers and securities firms to get into each other's businesses.
On a pro forma basis in 1999, based on the midpoint of the preannounced range for Schwab, the combined company would have had net revenues of $4.5 billion, net income of $663 million, and year-end customer assets of about $800 billion.
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Let's look at some charts:
Schwab - No longer just your friendly Discount Broker, but a Financial Holding Company. It will be interesting to see how this acquistion effects Schwab's NAV short and long term.....Jen
-- posted by JenL_2
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