Schwab Announces Agreement to Acquire Thomas Partners

Monday, October 15, 2012 5:15 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"We have worked together with Schwab since 2001, with more than half our assets currently custodied on Schwab’s Advisor Services platform, and we are excited to be joining such a great company"

SAN FRANCISCO--(BUSINESS WIRE)--The Charles Schwab Corporation today announced an agreement to acquire ThomasPartners, Inc., which includes an upfront payment of $85 million in cash and the opportunity for additional payments contingent on future growth in assets under management (AUM). The deal is expected to close during the fourth quarter, subject to customary closing conditions.

Headquartered in Wellesley, Massachusetts, ThomasPartners is a dividend income-focused asset management firm with $2.3 billion in AUM as of September 30, 2012, in largely growth-oriented investment portfolios designed to generate dividend income streams. ThomasPartners has consistently outperformed relevant benchmarks over the nine-year history of its dividend product.

At current AUM levels, Schwab anticipates that the acquisition will be neutral to EPS for the first 12 months post-closing, and become modestly accretive within the next 12 months. Given demographic trends that are fueling growing demand for income-oriented investment strategies, Schwab intends to further leverage ThomasPartners’ strong track record of growth and performance over time.

Post-closing plans include:

  • The CEO and chairman of ThomasPartners, Gregory Thomas, and his investment team led by president, chief operating officer and chief investment officer William McMahon, will remain with the firm in order to maintain and oversee the investment and portfolio management processes in place today.
  • Its money management solutions will be made available at a lower cost to clients of independent Registered Investment Advisors (RIAs) through the Schwab Advisor Services platform. At closing Schwab will waive transaction commission costs for ThomasPartners’ managed accounts custodied on Schwab’s Advisor Services platform.
  • ThomasPartners’ portfolios will be offered to Schwab retail clients as part of its growing selection of advisory solutions which include Schwab Advisor Network, Windhaven Portfolios, Schwab Managed Portfolios, Schwab Private Client, and access to third party portfolio management. Assets in advised accounts at Schwab have grown steadily over the years and today stand at $124 billion. After closing, ThomasPartners will no longer directly market to individual investors.

“There is a growing interest among investors and investment advisors in the growth-oriented dividend income approach that is ThomasPartners’ core focus and expertise,” said Walt Bettinger, Schwab president and chief executive officer. “With more than four million baby boomers entering retirement age each year in the United States, and tens of millions approaching that milestone over the coming decade, a rapidly growing segment of investors and investment advisors are focusing on producing income within their investment portfolios. ThomasPartners’ dividend strategy complements Schwab’s existing asset management line-up and helps provide our clients with a more complete range of money management solutions to serve them along their investing journey.”

According to Cerulli1, assets in separately managed account programs grew at a compound annual growth rate of 12.0% from 1999 to 2011 versus 4.6% for long-term securities. They are expected to grow at a CAGR of 14% from 2011 to 2015.

“We have worked together with Schwab since 2001, with more than half our assets currently custodied on Schwab’s Advisor Services platform, and we are excited to be joining such a great company,” said Gregory Thomas, chairman and CEO of ThomasPartners. “We believe the stars are aligned for a growing demand for the kind of money management approach we deliver, and Schwab’s large national footprint, wonderful reputation and growing client base will enable us to reach a vastly larger potential pool of investors.”

Forward Looking Statement

This press release contains forward-looking statements relating to the closing of the ThomasPartners transaction, the effect of the ThomasPartners transaction on Schwab’s EPS, the employment of the ThomasPartners team post closing, and the growing demand for income-oriented investment strategies, that reflect management’s current expectations. Achievement of these expectations is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations. Important factors that may cause such differences include, but are not limited to, satisfaction of conditions to closing the transaction, integration of ThomasPartners’ business into Schwab, general market conditions, including the level of interest rates, equity valuations and trading activity, and other factors set forth in Schwab’s Form 10-Q for the period ending June 30, 2012.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 8.7 million client brokerage accounts, 1.5 million corporate retirement plan participants, 838,000 banking accounts, and $1.89 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and 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 banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com.

About ThomasPartners, Inc.

ThomasPartners, Inc., headquartered in Wellesley Massachusetts, specializes in the construction of growth-oriented investment portfolios to generate current dividend income streams and that are actively managed to generate annual aggregate portfolio dividend income growth.

1 [ Cerulli Associates, The Cerulli Edge, Managed Accounts Edition, 2Q 2011 Issue]

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ThomasPartners Dividend Growth Composite (Cumulative returns including dividends net of fees through 06/30/2012)(Chart Source: ThomasPartners)
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Contact:

Charles Schwab
Media:
Alison Wertheim, 415-667-0475
Investors/Analysts:
Rich Fowler, 415-667-1841

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