The Commonwealth Bank's online discount brokerage service is awaiting regulatory approval to acquire the retail brokerage arm of TD Waterhouse Investor Services in Australia.
If the deal is approved, CommSec will expand its clientele from 800,000 to approximately 1.1 million, and see Australia's fourth largest retail online broker removed from the bank's line-up of competitors.
CommSec hopes the Australian Competition and Consumer Commission (ACCC) will approve the deal before May. Michael Blomfield, CommSec general manager, expressed confidence the regulator would approve the purchase.
According Blomfield, defending its market position was not the online trader's primary goal since trade volumes on TD Waterhouse's Web site was only one-fifth that of CommSec's.
"It's really an opportunistic acquisition. We held some discussions at a high level and the more we talked, the more things made sense...we weren't out on the market looking for a company to buy," he told ZDNet Australia .
Blomfield said both parties discovered a strong fit between their customer bases and business cultures, and the economies of scale achieved were too attractive to ignore.
"To run a stock brokerage is an expensive business and when [you] merge two of them, you knock out a lot of the costs that go into running them," he said.
The Commonwealth Bank is keeping the total cost of acquisition quiet but said it was a cash deal.
The TD Waterhouse brand will be discontinued from July, the deadline that CommSec has set itself to complete the integration process hand over.
A key part of the transition will be moving customer information over to CommSec's servers. Blomfield said it's not as hard as it looks.
"We've done enough work to suggest that we can transfer the data over from their system to ours without a great deal of risk," he said.
TD Waterhouse today issued a notice to its customers informing of its decision and soon expects to provide its customers with detailed information about the handover.
Dear Sir/Madam, Top of the day..Please inform me when ,for certain, your organisation willhave their phones working. Yours respectfully Ted Trevarthen