Schwab Breaks And Buys Ameritrade

Charles Schwab is nearing a deal to buy fellow broker Ameritrade for $26 billion, a premium on Ameritrade's $22.4 billion market cap. But what makes this really interesting is that Ameritrade was valued at $25.3 billion in October before Schwab helped to drop Ameritrade's price! Schwab makes more money from commissions than Ameritrade does. When Schwab announced that it was eliminating commissions, Ameritrade was forced to follow suit. Naturally, Ameritrade's price dropped more than Schwab's, so when Schwab announced the purchase of Ameritrade, the price was much less than it would have been a month earlier before commissions were eliminated.