TD Bank Group (TSX: TD) is walking away from its investment in Charles Schwab (NYSE: SCHW). The company this morning announced that it will be selling its entire interest in the US based bank via a secondary offering and stock buyback program being conducted by Charles Schwab.
The divestment is said to be part of a strategic review of its capital allocations, while the two parties are to maintain a relationship through an Insured Deposit Account agreement.
“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,” commented TD CEO Raymond Chun.
TD currently has a 10.1% economic interest in Schwab, via ownership of 184.7 million common shares worth approximately US$15.36 billion. Schwab has indicated it will repurchase US$1.5 billion worth of those shares, while the remainder of the position will be sold under a secondary offering to be launched by Schwab, pricing for which has yet to be set.
TD meanwhile has indicated that it will put nearly half of the proceeds from the transaction, or C$8 billion, into a share repurchase program. In line with this, the bank announced separately this morning that it will repurchase up to 100 million shares, or 5.7% of its outstanding equity, under a new normal course issuer bid.
TD Bank last traded at $82.81 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
