August 30, 2010

Schwab to Acquire ETF Manager Windward for $150 Million

Schwab RIAs to gain lower-cost access to Boston-based firm's three portfolios

Charles Schwab Corp. announced Monday, August 30, that it has agreed to acquire Boston-based Windward Investment Management, Inc., for $150 million in stock and cash.

Windward manages $3.9 billion in three separately managed account portfolios comprising mostly ETFs; Schwab said those portfolios will become available for RIAs affiliated with Schwab Advisor Services (SAS) at a "lower cost to clients" of those RIAs, in addition to being available to Schwab retail clients. Schwab said in a news release that after the deal was closed, it would begin waiving transaction commission costs for Windward managed accounts custodied on SAS platform.

Schwab said that the acquisition was expected to close during the fourth quarter of 2010, and that the acquisition would be "modestly accretives to EPS in the first 12 months post-closing."

Following the acquisition, Schwab said that Windward's founder, president, and CIO, Stephen Cucchiaro, and his investment team would remain with the firm.

Earlier this month, Schwab announced the rollout of three new fixed income ETFs. Earlier this summer, Schwab cut expenses on six of its existing ETFs as part of what Schwab executive Peter Crawford said was a strategy of helping investors "save money on zero commissions while Schwab builds its pool of ETFs."

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