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Charles Schwab to Acquire USAA Investment Management Assets for USD 1.8bn.


29 July 2019 - California, US-based financial services company The Charles Schwab Corp. has agreed to acquire assets of Texas, US-based USAA's Investment Management company for USD 1.8bn in cash, the company said.

The companies have also agreed to enter into a long-term referral agreement, effective at closing of the acquisition, that would make Schwab the exclusive wealth management and brokerage provider for USAA members.

USAA said this agreement with Schwab can help enhance members' financial futures with a client-first approach that offers access to more choices in investment products.

For Schwab, the transaction helps add scale to its USD 1.9tn Investor Services business through the addition of over 1m new accounts and approximately USD 90bn in client assets.

The transaction provides Schwab an opportunity to serve USAA members as its exclusive wealth management and brokerage provider, through the long-term referral agreement.

The transaction will be funded with available parent company cash. Schwab expects to have sufficient capital at the time of closing for pro forma Tier 1 Leverage ratio to remain in line with its 6.75%-7% target range.

The Charles Schwab Corp. (NYSE: SCHW) is a provider of financial services, with more than 365 offices and 12.0m active brokerage accounts, 1.7m corporate retirement plan participants, 1.3m banking accounts, and USD 3.70tn in client assets as of June 30, 2019.

Through its operating subsidiaries, the company provides a range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors.

The USAA family of companies provides insurance, banking, investments, retirement products and advice to more than 13 m current and former members of the US military and their families.

Credit Suisse Securities LLC served as financial advisor and Davis Polk and Wardwell LLP acted as legal advisor to The Charles Schwab Corp. Goldman Sachs and Co. LLC served as financial advisor and Simpson Thacher and Bartlett LLP acted as legal advisor to USAA.

Country: USA

Sector: Banking/Financial Services

Target: USAA/Investment Management company

Buyer: The Charles Schwab Corp

Vendor: USAA

Deal size in USD: 1.8bn

Type: Corporate Acquisition

Financing: Cash

Status: Agreed

Buyer advisor: Credit Suisse Securities , Davis Polk and Wardwell ,


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Publication:M & A Navigator
Date:Jul 29, 2019
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