TD Ameritrade CEO says he has no acquisition plans for a year or two

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Posted: Thursday, May 23, 2013 12:00 am

TD Ameritrade doesn’t expect to make any major acquisitions for the next year or two, Chief Executive Fred Tomczyk said Wednesday, with only two likely candidates left in the discount brokerage industry and slim chances of either winding up part of the Omaha-based company’s operations anytime soon.

Tomczyk spoke to investors and analysts Wednesday in London at the Barclays Americas Franchise Conference, and said there are only “one or two hands” left to play from the industry’s merger-and-acquisition deck of cards. He mentioned neither by name.

“The industry is not fully consolidated, but we are down to where there are only one or two hands to play,” Tomczyk said. “So as I always describe it, we are in the seventh of a nine-inning baseball game.”

The topic of acquisitions arose as Tomczyk, whose company employs 2,000 people in Omaha, fielded questions about TD Ameritrade’s use of cash; the company has $706 million of it on the balance sheet available for dividends, acquisitions, stock buybacks or other corporate uses. Profit in 2012 amounted to $586 million; the company makes money by charging a fee for stock trades that brokerage customers make via computer and by investing the cash in their accounts.

“Our first choice is to invest in the business, either through growth or acquisition,” Tomczyk said. “We have been good acquirers and disciplined acquirers.”

But another deal does not appear to be immediately likely, Tomczyk said.

There are only two likely partners, Tomczyk told the audience at London’s Langham Hotel in a session that was broadcast via the Internet.

One company, he said, is privately owned, and “not interested right now.” Large privately held discount brokers include Missouri-based Scottrade, New York-based Firstrade and Florida’s TradeKing.

The other prospect, Tomczyk said, is publicly traded, has balance sheet problems and probably will not work as a combination partner for as long as the next two years.

“If it ever came up, was on the block, I am sure we would get a call,” Tomczyk said. “Most people would say we are the most logical acquirer ... but being patient here has worked for us because our stock relative to theirs has done quite well.”

TD Ameritrade’s chief publicly traded rivals are Charles Schwab Corp., whose stock has risen about 53 percent in the past year, and ETrade Financial, whose shares have risen about 30 percent in the past year. TD Ameritrade’s shares have risen about 36 percent in the same period.

Contact the writer:

402-444-3133, russell.hubbard@owh.com

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