TheEnforcer
05-09-2005, 03:28 PM
http://news.yahoo.com/s/nm/20050509/bs_nm/...trade_etrade_dc (http://news.yahoo.com/s/nm/20050509/bs_nm/financial_ameritrade_etrade_dc)
PHILADELPHIA (Reuters) - E*Trade Financial Corp. (NYSE:ET - news) has expressed an interest in buying rival Ameritrade Holding Corp. (Nasdaq:AMTD - news) in a deal that could further consolidate the shrinking world of online trading, The Wall Street Journal reported on Monday.
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Shares of Ameritrade soared 20 percent on the report, rising $2.22 to $13.54 is afternoon trade on Nasdaq. E*Trade shares rose 77 cents, or 6.5 percent, to $12.70 on the New York Stock Exchange.
Analysts suggested E*Trade could pay $15 a share, or about $6 billion, for Ameritrade, but the price could escalate further if a competing suitor emerged.
Citing people familiar with the matter, The Wall Street Journal said E*Trade sent a letter to Ameritrade last week with the aim of spurring merger talks.
The letter notified Ameritrade's board of E*Trade's intention to pursue a deal by signaling the price that it would be willing to pay. The Wall Street Journal did not know the proposed terms of the deal, which would bring together two of the world's biggest players in online trading.
Representatives for E*Trade and Ameritrade declined to comment on the report.
As of Friday afternoon, E*Trade's market capitalization stood at $4.4 billion, and Ameritrade's was $4.55 billion.
The deal could boost E*Trade's earnings by 9 percent as cost savings and extra revenue more than offset an estimated 10 percent loss in customers, research and investment banking company Fox-Pitt Kelton said in a research report.
"Today's favorable margins in retail trading are likely to prove unsustainable, given the commoditization of the retail stock trade, the increasing price sensitivity of the customers, and plenty of room for price cuts," it said.
IRG Research raised its rating on Ameritrade to "neutral" from "sell."
Last year, Toronto-Dominion Bank (Toronto:TD.TO - news) (NYSE:TD - news) said its TD Waterhouse unit had been in talks about a possible merger with E*Trade, but negotiations collapsed because the companies failed to agree on terms of a deal.
PHILADELPHIA (Reuters) - E*Trade Financial Corp. (NYSE:ET - news) has expressed an interest in buying rival Ameritrade Holding Corp. (Nasdaq:AMTD - news) in a deal that could further consolidate the shrinking world of online trading, The Wall Street Journal reported on Monday.
ADVERTISEMENT
Shares of Ameritrade soared 20 percent on the report, rising $2.22 to $13.54 is afternoon trade on Nasdaq. E*Trade shares rose 77 cents, or 6.5 percent, to $12.70 on the New York Stock Exchange.
Analysts suggested E*Trade could pay $15 a share, or about $6 billion, for Ameritrade, but the price could escalate further if a competing suitor emerged.
Citing people familiar with the matter, The Wall Street Journal said E*Trade sent a letter to Ameritrade last week with the aim of spurring merger talks.
The letter notified Ameritrade's board of E*Trade's intention to pursue a deal by signaling the price that it would be willing to pay. The Wall Street Journal did not know the proposed terms of the deal, which would bring together two of the world's biggest players in online trading.
Representatives for E*Trade and Ameritrade declined to comment on the report.
As of Friday afternoon, E*Trade's market capitalization stood at $4.4 billion, and Ameritrade's was $4.55 billion.
The deal could boost E*Trade's earnings by 9 percent as cost savings and extra revenue more than offset an estimated 10 percent loss in customers, research and investment banking company Fox-Pitt Kelton said in a research report.
"Today's favorable margins in retail trading are likely to prove unsustainable, given the commoditization of the retail stock trade, the increasing price sensitivity of the customers, and plenty of room for price cuts," it said.
IRG Research raised its rating on Ameritrade to "neutral" from "sell."
Last year, Toronto-Dominion Bank (Toronto:TD.TO - news) (NYSE:TD - news) said its TD Waterhouse unit had been in talks about a possible merger with E*Trade, but negotiations collapsed because the companies failed to agree on terms of a deal.