Schwab Spikes on Dividend, Buyback Plan

The brokerage will use proceeds from its U.S. Trust sale for a $3.5 billion capital restructuring.
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Shares of

Charles Schwab

(SCHW) - Get Report

jumped 7% Monday after the brokerage set plans for a $3.5 billion capital restructuring that includes a special dividend and a big buyback.

The news follows the company's sale of U.S. Trust, its wealth management unit, to

Bank of America

(BAC) - Get Report

. Schwab received $2.7 billion in proceeds from the deal, which closed Sunday.

Schwab said Monday that it will return $1.2 billion to shareholders through a $1-a-share special dividend. In addition, it plans a $2.3 billion share repurchase through a modified Dutch auction, and it will offer up to $750 million in debt.

The buyback will be for up to 84 million shares, representing about 7% of the San Francisco company's stock. Founder Charles Schwab will sell up to 18 million of his shares after the tender offer, but he will still retain about an 18% stake in the company.

The dividend, meanwhile, will be paid Aug. 24 to shareholders of record July 24.

Shares of Charles Schwab were up $1.42, or 6.9%, to $21.94 in recent trading.