TD Ameritrade Holding Corp. has agreed to acquire Fiserv Trust Co. and the accounts of Fiserv's institutional retirement plan and advisor services operations for $225 million in cash at closing, plus contingent cash consideration of up to $100 million based on the achievement of revenue targets over the 12 months subsequent to closing.
In addition, TD Ameritrade will reimburse Fiserve for the net capital included in the business of approximately $50 million, and Fiserv will retain its additional excess capital of approximately $30 million. As part of the transaction, Fiserv's registered investment advisor and retirement plan administrator clients will transition post-closing to TD Ameritrade.
Fiserv will also enter into a transition services agreement with TD Ameritrade, under which Fiserv will provide services for a period of up to six months after the closing to facilitate an orderly transition of the business.
"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 of 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."
The deal is one of two transactions Fiserv has entered to sell Fiserv Investment Support Services, based in Denver. In a separate transaction, Bob Beriault, who is currently group president for Fiserv ISS, has agreed to buy the remaining accounts and net capital of the investment support services business for approximately $50 million in cash. Fiserv will retain a preferred share minority interest in the business. Beriault's new private company 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. The transaction is expected to close after regulatory approval and the completion of the transition to TD Ameritrade.
Fiserv ISS is one of the nation's largest trustees of self-directed retirement plans, administering nearly 300,000 retirement and custodial accounts valued at $46 billion. Revenues for Fiserv ISS segment in 2006 were $137 million.