Ameritrade Rejects E-Trade, to Buy TD Waterhouse
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Ameritrade Holding Corp. (AMTD) on Wednesday rejected a takeover offer from E-Trade Financial Corp. (ETRD) and said it will instead acquire rival online brokerage TD Waterhouse from Toronto-Dominion Bank.
The acquisition has been rumored for weeks. Online brokerages — which at the height of the stock market boom saw valuations soar above brick-and-mortar firms such as Merrill Lynch & Co. (MER) and Morgan Stanley Inc. (MWD) — have recently been hurt by price cuts, lower commissions and a drop-off in equity investing.
The overall value of the deal was not disclosed.
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Ameritrade Chief Executive Joe Moglia (search) will become CEO of the combined entity.
E-Trade earlier this month was said to have sweetened its bid to acquire Ameritrade, offering a 49.5 percent stake in the combined company and about $2 billion in cash. In May, Ameritrade rejected an offer from E-Trade for a 47.5 percent stake in the combined company plus $1.5 billion.
Toronto-Dominion (search) had also been approached by E-Trade about a possible merger, but the talks broke down over how the newly formed company would be run. Ameritrade's Moglia has also resisted any plans to relinquish control of the company.
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Ameritrade has a history of successful transactions, having acquired or merged with five companies since 2001. That includes the acquisition of National Discount Brokers Corp. in 2001 and Bidwell & Co. last year.
Its biggest coup to date has been its 2002 merger with rival Datek Online Holding Corp (search). With that move, Ameritrade added more than 800,000 accounts and $11 billion in client assets.
Shares of Ameritrade shares rose 17 cents to $14.99 on the Nasdaq. Toronto Dominion shares that trade on the New York Stock Exchangerose 55 cents to $44.16, which is a new 52-week high for the stock. E-Trade shares rose 23 cents to $13.14 on the New York Stock Exchange.