Thursday, November 19, 2009 7:34 AM
E*Trade a deal that should happen for TD
Andrew Willis
If ever there was a deal that should happen, it’s this one: The long-awaited TD Ameritrade takeover of E*Trade Financial.
And while it’s far from certain the merger is coming, a deal seems a little closer to actuality, after TD Ameritrade CEO Fred Tomczyk said he is open to the union.
Mr. Tomczyk, formerly an executive at minoirty owner Toronto-Dominion Bank TD-T and long a confidant of TD Bank boss Ed Clark said at a conference that he would condsider acquiring E*Trade under certain circustances. E*Trade has struggled over the past two years with its exposure to real estate lending, a pothole TD Ameritrade managed to avoid.
Kim Hillyer, a spokesperson for TD Ameritrade, confirmed to wire services on Wednesday that Mr. Tomczyk said he would entertain a deal, but told AP and other services that his response reflected the company’s general view of mergers and acquisitions.
Mr. Tomczyk's remarks were enough to bump up E*Trade’s stock price by 9 per cent on Wednesday. There are hugely compelling cost synergies that come when discount brokerage houses are combined, and TD Ameritrade is a past master at realizing on these savings, as the company has done a number of successful acquistions.
TD Ameritrade also has the firepower to do a deal, with $6.68-billion ( U.S.) in cash and short-term investments and the support of minority shareolder TD Bank. E*Trade’s market capitalization is $3.2-billion.
The dominant U.S. discount brokerage, measured by assets under management, is Charles Schwab. Mutual fund manager Fidelity Investment is also a major player in this sector.
