Toronto-Dominion Bank confirmed that it has agreed to increase its direct ownership of TD Ameritrade Holding Corp. by about five percentage points.
A TD Ameritrade stockholders agreement had limited Toronto-Dominion's stake in the brokerage to 39.9%. The limit increased to 45% last month.
"We continue to be rewarded for our investment in TD Ameritrade, as it delivers great performance despite the difficult market environment," Ed Clark, the president and chief executive officer of Toronto-Dominion, said Friday in a press release. "As we've said before, it's been our intention for some time to take advantage of this opportunity to increase our ownership stake in this strong franchise."
On Sept. 14, 2006, Ameritrade Holding Corp. bought TD Waterhouse Group from Toronto-Dominion.
As a result of the transaction, Toronto-Dominion acquired a 32% stake in Ameritrade, which changed its name to TD Ameritrade Holding Corp.
That agreement allowed Toronto-Dominion to purchase an additional 27 million shares of TD Ameritrade common stock. Last week Toronto-Dominion amended the arrangement to buy the stake in common shares rather than cash.
It expects the 27 million shares to be delivered on the settlement date on or about March 2 at a cost of about $515 million.
Toronto-Dominion said it does not expect the arrangement to affect its earnings.
It has to wait seven years to increase its stake in TD Ameritrade again, though it can make a full takeover bid at any time.
TD Ameritrade is the second-largest U.S. discount brokerage. The Omaha company's fourth-quarter net income fell 23% from a year earlier, to $184.4 million, or 31 cents a share. Its revenue fell 5%, to $610.7 million.