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Schwab to acquire Windward Investment Management

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Charles Schwab has entered into an agreement to acquire Windward Investment Management for USD150m in stock and cash.

The deal is expected to close during the fourth quarter, subject to customary closing conditions.

Headquartered in Boston, Windward Investment Management is an investment advisory firm that manages USD3.9bn in three broadly diversified investment portfolios comprised primarily of exchange-traded fund securities.

Windward’s clients include investment advisers, non-profit organisations, endowments, retirement plans and individuals.

Windward has enjoyed compound annual growth in client assets of 56 per cent per year over the five years ending 31 July 2010. At current assets under management levels, Schwab anticipates that the acquisition will be modestly accretive to EPS in the first 12 months post-closing.

The founder, president and chief investment officer of Windward, Stephen J. Cucchiaro, and his investment team will remain with the firm in order to maintain and oversee the investment and portfolio management processes.

Its money management solutions will be made more available and at a lower cost to clients of independent registered investment advisers through the Schwab Advisor Services platform.

Windward’s portfolios will also be offered to Schwab retail clients as part of Schwab’s overall managed portfolios strategy.

"Among independent advisors and retail investors there is a growing interest in the kind of value Windward can provide – portfolio construction which puts risk management at its core – an ideal approach for today’s world," says Walt Bettinger, Schwab president and chief executive officer. "A number of Schwab Advisor Services clients currently rely on Windward for cost-effective and highly diversified core portfolio holdings for their clients, and we think that upon closing streamlined access and improved pricing from Schwab will further fuel Windward’s growth and enable us to add significant client value for advisors. Windward’s straightforward, scalable strategies are also a natural and consistent fit with Schwab’s existing approach to portfolio management for our traditional retail clients."

"Schwab has provided our custodial platform for 15 years and today nearly a third of the assets we manage come directly through our relationship with Schwab, and over two-thirds of our assets are currently custodied at Schwab, so we are proud and excited to be joining such a great company," adds Cucchiaro. "Schwab’s vibrant brand coupled with its unrivaled leadership with RIAs and individual investors will add significant strength to our message and our ability to introduce more investors to Windward’s unique and proven approach."

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