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Rating:TD Ameritrade Pulls Trigger on Fiserv ISS Deal Not Rated 3.2 Email Routing List Email & Route  Print Print
Friday, May 25, 2007

TD Ameritrade Pulls Trigger on Fiserv ISS Deal

by: Sean Hanna, Editor in Chief

Fiserv's sale of its Fiserv Investment Support Services (Fiserv ISS) business has ended where it began: with TD Ameritrade. Top executives on the two sides of the sale of the custody business worked out the final details of the deal this week that will send approximately 300,000 retirement and custodial accounts with some $46 billion of assets into new hands. The two sides expect the sale to close by the end of the year, and possibly sooner with regulatory approval.

The MFWire first reported that Fiserv was in the process of selling its Fiserv ISS business in April (see, "Fund Supermarket May Sell, April 18, 2007).

The value of the deal could reach as much as $405 million when all of the components of the sale are included. TD Ameritrade will pay Brookfield, Wisconsin-based Fiserv $225 million in cash for the Fiserv ISS retirement plan and advisor services operations. It will also pay as much as another $100 million if the business achieves set revenue targets over the twelve months after the deal closes. TD Waterhouse will also reimburse Fiserv $50 million of net capital included in the business and allow Fiserv to retain its additional excess capital of approximately $30 million.

The two firms also overcame one of the earlier hurdles to the sales completion when Fiserv agreed to sell a third business providing custody business primarily dealing bank IRA-related assets to Bob Beriault, who is currently group president for Fiserv ISS. Beriault will pay approximately $50 million in cash for the business, in which Fiserv will retain a preferred share minority interest. That business will provide back-office and custody services for 190,000 retirement accounts with an estimated $16 billion in assets and $1 billion in FDIC insured deposits.

For TD Ameritrade, the purchase eliminates a smaller competitor to its advisor custody business. It also adds scale to its nascent retirement focused custoday business. TD Ameritrade entered that business last year when it acquired Baltimore-based Gail Weiss Associates, a provider of clearing and custody solutions for third-party administrators and recordkeepers seeking to use the NSCC's Defined Contribution Clearing and Settlement (DCC&S) platform.

"We looked hard to find the right partner for our institutional clients, and TD Ameritrade offered a great fit," said Skip Schweiss, executive vice president, Fiserv Investment Support Services. "They share our commitment to exceptional service, and we are impressed with their support for the fee-compensated advisory industry and their emerging strength in the open architecture defined contribution market space."

Tom Bradley, president of TD Ameritrade Institutional, said that he is "confident that these clients will benefit significantly from our industry-leading technology, flexible service teams, extensive management experience and ongoing advisor advocacy efforts."

Jeffery Yabuki, president and chief executive officer of Fiserv, said that the sale comes as the bank focuses "on operating businesses where we have a clear leadership position which translates to strong growth and superior value for our clients."

"The proceeds from this sale will provide us with additional capital to deploy in a manner that builds shareholder value. We are focused on opportunities which enhance our long-term growth prospects in businesses where we have a strong competitive position. We are pleased with this outcome," added Yabuki. 

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