Ameritrade and TD Waterhouse will officially join hands to form TD Ameritrade, the firms announced in a press release on Wednesday.

Ameritrade will acquire TD Waterhouse, and in exchange give TD Waterhouse 32 percent of the combined company. Ameritrade shareholders will receive a dividend of $6 per share. TD Bank Financial, the parent to TD Waterhouse, isn't giving up on the brokerage business entirely -- it will buy Ameritrade's Canadian brokerage operations for $60 million.

Current Ameritrade CEO Joe Moglia will take the helm of the new company, with an initial board of directors composed of Moglia; J. Joe Ricketts, founder and chairman of Ameritrade; J. Peter Ricketts, president and chief operating officer of TD Ameritrade and Thomas S. Ricketts.

The Ricketts family agreed to limit their ownership of the new company to 29 percent within 10 years of the deal's close. TD Bank Financial's ownership of TD Ameritrade cannot exceed 39.5 percent of the new company within three years after the close of the deal and 45 percent of the company from the fourth to tenth year after the deal.

"This opportunity accelerates our long-term investor strategy with access to branches and advice … we expect that it will create significant value for shareholders by generating substantial cost synergies and deliver a more diverse revenue mix by shifting to an asset-gathering model," said Moglia.

TD Ameritrade will become the third largest brokerage in terms of total accounts with 5,931,000 clients and client assets of approximately $219 billion. The average number of client trades of the company will total 239,000.

In a letter posted to the Ameritrade website, Moglia estimated that the deal will probably take six months to close. In the meantime, comments and suggestions are welcome at JoeM@Ameritrade.com.  

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