(Photos: Bloomberg/Shutterstock;art by Chris Nicholls)

Charles Schwab announced it isbuying rival TD Ameritrade for $26 billion in an all-stocktransaction. It made the announcement early Monday, four daysafter reports that the two discount brokeragefirms were in merger talks. 

In addition, TD Ameritrade has suspended its CEO search andnamed CFO Stephen Boyle as interim president and CEO, replacing TimHockey. Several months ago, Hockey said he planned to leave thefirm; he will act as an advisor to Boyle through Feb. 28,2020.

Related: Schwab wants the investing business to besubscription-based

"A new chapter for me…best of luck to my colleagues @TDAmeritrade," Hockey said on Twitter. "Life is like a bike trip. There are many twists and turns. The idea is to enjoy the ride…and as Einstein said, you only stay upright if you keep moving forward!"

The deal potentially unites more than 14,000 RIAs, some $5.1trillion in investor and advisory assets, and 24 millionaccounts. The two firms'combined revenue is estimated at $17 billion with pre-tax profitsof $8 billion.

Toronto-Dominion Bank, which nowowns some 43 percent of TD Ameritrade common stock, isexpected to own roughly 13 percent of the new company; itsvoting stake will be capped at 9.9 percent. Other TDAmeritrade stockholders and current Schwab shareholders should thenown about 18 percent and 69 percent,respectively. 

Once approved — the deal facesantitrust and other hurdles — the new entity aims to "capitalize onthe unique opportunity to build a firm with the soul of achallenger and the resources of a large financial servicesinstitution," Schwab President and CEO Walt Bettinger said in astatement on Monday. 

As for RIAs,"I see two camps forming,"said Gavin Spitzner, president of Wealth Consulting Partners. "One,for those now with TD Ameritrade expressly not to be with Schwab, will use this as a reason tomigrate away to an established firm or potentially an upstart likeAltruist."

The second camp could see thecombination as having extra resources to invest in innovation and"doesn't care about the competitive angle of their custodiancompeting alongside them in the wealth business and might grumblebut will stay," Spitzner explained. "Most interesting will be theripple effects and who acquires or merges with who coming out ofthis."

As to how the deal came to be —following on the heels of Schwab's and TD Ameritrade's moveto zero commissions on trades — GeorgePapadopoulas, an RIA, said on Twitter: "Lets face it, Schwab is ahell of a competitor! They managed to flat out corner TD Ameritradewhose executive team could not manage to transition the companyaway from relying so much on trading commissions. And then theywent for the kill!"

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