Shares of Broadridge Financial Solutions (NYSE:BR) rose nearly 14% last month, according to data provided by S&P Global Market Intelligence, after the financial technology company announced a new acquisition.
On April 17, Broadridge reached a deal to purchase retirement plan custody and trust assets from TD Ameritrade (NASDAQ:AMTD). Broadridge intends to integrate these assets into its Matrix Financial Solutions platform, which provides mutual fund and ETF trade processing services to the retirement industry.
"The TD Ameritrade trust and custody assets are a strong complement to Broadridge's established mutual fund and retirement business, and uniquely positions us as one of the largest neutral, independent service providers of custodial and sub-custodial solutions," Broadridge executive Michael Liberatore said. "The acquisition represents the next step forward in Broadridge's strategy of serving a broader set of retirement stakeholders and unlocking new opportunities for our clients."
As an industry leader, Broadridge enjoys scale advantages over its rivals. TD Ameritrade even acknowledged this in the press release announcing the deal. "After careful consideration, we decided to exit a part of our retirement plan trust business, one that's better served by a scale player dedicated to expanding and investing in this business," TD Ameritrade Institutional President Tom Nally said.
Once the acquisition is completed, Broadridge expects its Matrix platform to have approximately $420 billion in assets under administration. This massive asset base should continue to provide it with a powerful competitive advantage in the years ahead.