As the coronavirus affects government and other operations across the U.S., the Department of Justice said Tuesday it is asking firms involved in mergers and acquisitions to add 30 days to their “deal timing agreements” — including the $26 billion purchase by Charles Schwab of TD Ameritrade.
The DOJ says it needs the extra time to finish its review of deals “once all parties comply with document requests.” It also is postponing all depositions and handling meetings via phone or videoconference “whenever possible.”
But Schwab says the deal and its associated regulatory process remain on track.
“We don’t have any comment on the impact of the DOJ’s announced changes, nor have we made any change to our previously announced expectation that the deal will close sometime in the second half of the year,” according to a spokesperson.
The merger would unite about 14,000 of the country’s 20,000 RIAs, he says, adding that some of these 14,000 RIAs use more than one custodian.
Schwab has an estimated 50% market share as an RIA custodian; TD Ameritrade’s share is roughly 15% to 20%, and Fidelity has about 25%.
The DOJ’s timetable shift “will ensure that the [antitrust] division can continue to review transactions efficiently and effectively,” said Assistant Attorney General Makan Delrahim, in a statement. “The division remains open for business, and we will continue to carry out our mission to protect competition and the American consumer.”
About a month ago news broke that the Justice Department was calling a large number of RIAs and professionals working with RIAs about possible anticompetitive impacts of the merger.
The calls were part of the second request in the discovery procedure staged by the DOJ’s Antitrust Division, which is charged with reviewing mergers and acquisitions.
“A second request is typical for a deal of this size, and we are not surprised the government would ask for more information and time to review it,” Schwab said at the time.
Ryan Hughes of Bull Oak Capital, though, said recently that he’s not convinced the DOJ would stop the big RIA merger. “When was the last time a merger got blocked?” he asked.
The DOJ approved the $26 billion tie-up of T-Mobile and Sprint earlier this year, but it did block Novelis’ proposed purchase of Aleris in September to “preserve competition in the North American market for rolled aluminum sheet” used to make cars.