E-Trade to Buy Kobren Insight
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Online brokerage E*Trade Financial Corp. (ET) said on Tuesday it would buy mutual fund adviser Kobren Insight Management (search) to bolster its wealth management business and become a full-service financial services firm.
Terms of the transaction, which E*Trade expects to close in the fourth quarter, were not disclosed.
Kobren Insight manages about $1 billion for private clients and is run by Eric Kobren, who built a reputation by publishing Fidelity Insight, a monthly newsletter about the more than 200 mutual funds offered by Fidelity Investments.
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The 20-year-old newsletter, and another newsletter that focuses on 200 mutual funds sold through Charles Schwab (SCH), TD Waterhouse and Fidelity, are not part of the transaction, an E*Trade spokeswoman said.
Kobren, Managing Director Rusty Vanneman and six analysts who conduct more than 600 interviews with mutual fund managers in a year, will join E*Trade, the company said in a statement. Other Kobren analysts will remain with the newsletters, the spokeswoman said.
E*Trade said it was looking for other similar acquisitions and expects the Kobren deal to contribute close to $10 million in revenue and $2.3 million in net income in 2006.
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The deal was announced a day after E*Trade said it would buy rival U.S. online broker HarrisDirect from Canada's BMO Financial Group (search) for $700 million in cash to strengthen its position in the consolidating online brokerage industry.
The HarrisDirect transaction and the January acquisition of Howard Capital Management, signal E*Trade's expansion from a trading-focused organization to a fully-integrated financial services firm, the company said in a statement.
E*Trade said it wants to acquire established wealth management firms in major U.S. cities and large suburban areas, such as Orange County and the Silicon Valley region in California.
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Shares of E*Trade rose 30 cents, or 1.86 percent, to $16.40 after touching a 52-week high of $16.70 earlier in the session on the New York Stock Exchange (search).