05:33 ETFC TD Ameritrade in merger talks with E*Trade - WSJ (15.57 )
The Wall Street Journal reports TD Ameritrade (AMTD 16.35) and E*Trade (ETFC) are holding merger discussions. A spokeswoman for E*Trade said the firm's management team has consistently stated it believes there is "tremendous value in consolidation that aligns business strategy and operational synergies and will do what is in the best interest of its customers." A TD Ameritrade spokeswoman said, "We have talked and continue to talk to peers in the industry." E*Trade and TD Ameritrade have been in serious discussions for weeks but aren't yet close to a deal, according to people familiar with the matter. They have discussed an alliance several times in previous years but have never managed to make it to the altar. This time, however, they may feel more pressure to reach a deal. Two hedge funds with big stakes in TD Ameritrade have publicly urged the two companies to talk. The two funds -- Jana Partners LLC and S.A.C. Capital -- have argued that Toronto-Dominion Bank, which owns 39% of TD Ameritrade, opposes a merger of the co because its interests aren't fully aligned with other shareholders. The funds, which own a combined 8.4% of TD Ameritrade, contend that the Canadian bank wants to use the online broker to grow in the U.S. and isn't necessarily focused solely on maximizing shareholder value. TD Bank has publicly disagreed with that characterization of its position. Even so, Jana and S.A.C. successfully pressured TD Ameritrade to remove TD Bank's chief executive from the online broker's mergers and acquisitions committee in early July. It isn't clear what a merger deal between E*Trade and TD Ameritrade would be worth or how it might be structured. One person familiar with the talks estimated a deal could create a co valued at as much as $20 bln, given the cost saving that could result from uniting both company's accounts on a single computer system. The consolidation would make the cost of adding new clients minimal. A person familiar with the merger talks said the discussions currently are focused on making sure both online brokers agree on strategy.