The Charles Schwab Corporation Announces Secondary Offering of Its Common Stock Held by an Affiliate of The Toronto-Dominion Bank; Plans $1.5 Billion Stock Repurchase

Rhea-AI Summary

Charles Schwab (NYSE: SCHW) announced a significant secondary offering where TD Group US Holdings , holding 184.7 million shares (10.1% ownership), will exit its full investment in the company. Additionally, Schwab entered into a $1.5 billion share repurchase agreement with TD, to be executed at the secondary offering price less underwriting discount.

The repurchase will be funded by cash on hand under Schwab's existing share repurchase program, leaving approximately $7.2 billion remaining in the authorized program. The company plans to continue opportunistic repurchases throughout 2025, aligned with its financial objectives. TD Securities and Goldman Sachs will lead the secondary offering, from which Charles Schwab will not receive any proceeds.

Positive

• $1.5 billion share repurchase program implementation
• Substantial $7.2 billion remaining in authorized repurchase program
• Strong cash position enabling repurchase funding from cash on hand
• Strategic reduction of concentrated ownership improving share float

Negative

• No proceeds from secondary offering benefiting the company
• Large shareholder (TD Bank) completely exiting position

Insights

Financial Markets Analyst

The announced transaction represents a pivotal moment for Charles Schwab, with multiple strategic and financial implications that deserve careful analysis. TD Bank's complete exit from its 10.1% stake (184.7M shares) through a secondary offering, combined with Schwab's $1.5 billion share repurchase, will trigger significant market dynamics.

The transaction structure is particularly noteworthy. By executing the repurchase at the secondary offering price (minus underwriting discount), Schwab ensures price alignment between the private and public transactions. This approach helps maintain market stability during the large-scale share distribution and demonstrates sophisticated capital markets management.

The $1.5 billion repurchase commitment, funded through cash on hand, signals robust liquidity and capital position. With $7.2 billion remaining in the authorized repurchase program post-transaction, Schwab maintains substantial flexibility for future capital returns. The company's statement about pursuing "opportunistic repurchases" throughout 2025 suggests a disciplined approach to capital deployment.

For existing shareholders, this transaction presents several positive implications: 1) The removal of TD's large ownership block eliminates potential overhang concerns 2) The substantial buyback provides technical support for the stock 3) The increased float could enhance trading liquidity and potentially broaden the institutional investor base.

The involvement of TD Securities and Goldman Sachs as lead underwriters indicates careful orchestration of this large offering, which should help ensure orderly market absorption of the shares. The complete exit by TD, while maintaining an orderly market process, demonstrates sophisticated financial engineering that benefits all stakeholders.

Investment Banking Specialist

This transaction's structure represents a masterclass in managing large stake dispositions. By combining a public secondary offering with a private repurchase agreement, Schwab and TD have crafted a solution that addresses multiple stakeholder interests while minimizing market disruption.

The pricing mechanism is particularly elegant: linking the private repurchase price to the public offering price (minus underwriting discount) ensures price discovery occurs through the broader market while maintaining fairness between the private and public components. This structure has been successfully employed in other large financial sector transactions but rarely at this scale.

The selection of TD Securities and Goldman Sachs as lead underwriters brings complementary strengths: TD's intimate knowledge of the stake being sold and Goldman's broad distribution capabilities and market-making expertise. This partnership should facilitate efficient price discovery and placement with long-term institutional investors.

For institutional investors, this offering presents a rare opportunity to acquire a significant position in Schwab through a structured process. The increased float post-transaction could lead to higher index weightings and potentially trigger additional institutional demand. The complete exit by TD also removes any uncertainty about future large share dispositions, providing clarity on the ownership structure going forward.

WESTLAKE, Texas--(BUSINESS WIRE)-- The Charles Schwab Corporation (NYSE: SCHW) (the “Company” or “Charles Schwab”) today announced the commencement of a secondary offering of its common stock through which TD Group US Holdings LLC, an affiliate of The Toronto-Dominion Bank (“TD”), intends to exit its full investment in the Company. The shares being offered by TD will be sold in an underwritten public offering.

TD currently holds 184.7 million shares of the Company’s common stock, representing a 10.1% economic ownership.

Charles Schwab also announced today that it entered into a share repurchase agreement with TD, conditioned on the secondary offering, pursuant to which the Company agreed to repurchase $1.5 billion of its nonvoting common stock directly from TD, in a private transaction, at the price per share at which the shares of common stock are sold to the public in the secondary offering less the underwriting discount (the “Repurchase”). Closing of the Repurchase is expected to occur immediately following the completion of the public offering. The Repurchase will be made under the Company’s existing share repurchase program and will be funded by cash on hand. Following the completion of the Repurchase, the Company expects to have $7.2 billion remaining under its authorized program. Over the course of 2025, the Company expects to continue to pursue opportunistic repurchases where consistent with its expected progress on its key financial objectives.

Following the secondary offering and the Repurchase, TD will have disposed of all of its shares. Charles Schwab will not receive any of the proceeds from the sale of shares of its common stock.

The secondary offering will be led by TD Securities and Goldman Sachs & Co. LLC.

Charles Schwab has filed a registration statement (including a prospectus) and a preliminary prospectus supplement with the Securities and Exchange Commission (the “SEC”) for the secondary offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Charles Schwab has filed with the SEC, including the preliminary prospectus supplement dated February 10, 2025, for more complete information about Charles Schwab and this secondary offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and the preliminary prospectus supplement if you request them by contacting: (i) TD Securities (USA) LLC, 1 Vanderbilt Avenue, New York, NY 10017, telephone: 1 (855) 495-9846 or by email at TD.ECM_Prospectus@tdsecurities.com; or (ii) Goldman Sachs & Co. LLC, Attn: Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1 (866) 471-2526, facsimile: (212) 902-9316 or by email at Prospectus-ny@ny.email.gs.com.

This announcement shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements include statements regarding the offering and the Repurchase, the Company’s plans, objectives, expectations and intentions and the financial condition, results of operations and business of the Company. These forward-looking statements are subject to risks and uncertainties, including, among other things, risks related to the ability of the Company to consummate the offering and the Repurchase and the risks described in the Company’s most recent reports on Form 10-K and Form 10-Q, which have been filed with the SEC and are available on the Company’s website (www.aboutschwab.com/financial-reports) and on the SEC’s website (www.sec.gov). The Company makes no commitment to update any forward-looking statements.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 36.5 million active brokerage accounts, 5.4 million workplace plan participant accounts, 2.0 million banking accounts, and $10.10 trillion in client assets. Through its operating subsidiaries, the Company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://www.sipc.org), and its affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250209475232/en/

MEDIA:

Mayura Hooper

Charles Schwab

Phone: 415-667-1525

public.relations@schwab.com

INVESTORS/ANALYSTS:

Jeff Edwards

Charles Schwab

Phone: 817-854-6177

investor.relations@schwab.com

Source: The Charles Schwab Corporation

FAQ

How much is Charles Schwab (SCHW) spending on its share repurchase from TD Bank?

Charles Schwab is spending $1.5 billion to repurchase shares directly from TD Bank through a private transaction.

What percentage of Charles Schwab (SCHW) does TD Bank currently own?

TD Bank currently holds 184.7 million shares of Charles Schwab, representing a 10.1% economic ownership.

How much will remain in SCHW's share repurchase program after the TD Bank transaction?

Following the TD Bank repurchase, Charles Schwab will have $7.2 billion remaining under its authorized repurchase program.

When will Charles Schwab (SCHW) complete the share repurchase from TD Bank?

The repurchase is expected to close immediately following the completion of the public offering.

Will Charles Schwab (SCHW) receive any proceeds from TD Bank's secondary offering?

No, Charles Schwab will not receive any proceeds from the sale of shares in the secondary offering.