Schwab Expected To Raise $480 Million in Common Stock Offering; SCHW, ETFC, UBS
| 20 January 2010
The Charles Schwab Corporation (SCHW) is on the move. The company
announced yesterday that it is planning to sell 26.3 million shares in a common stock offering that is expected to raise $480 million. The offering could raise as much as $553 million if the underwriters exercise an over-allotment option.
The company says it plans to use the proceeds to "support balance sheet growth, including expansion of the Company’s deposit base and potential migration of certain client balances from money market funds into Schwab Bank." Schwab's money market funds pay a typically dowdy 0.01% while a high-yield checking account pays 1.05% interest. This also compares favorably with rates at banks such as Wells Fargo (WFC) which run 0.05% on average.
Perhaps Schwab smells opportunity in the wake of E*TRADE's (ETFC) disastrous banking debacle which is is till trying to
clean up. Though Schwab did not say it would use proceeds to help fund any potential future acquisitions, the firm has been rumored to be interested in E*TRADE. Though TD Ameritrade (AMTD) is the
clear winner in the merger rumor wars thus far.
UBS Securities (UBS) is the sole book-running manager of the underwriting. Underwriters include UBS, JP Morgan (JPM), Citigroup (C), Credit Suisse and Wells Fargo among others.
