Ameritrade Holding Corp, the US' third-largest online discount brokerage, agreed Sunday to acquire a rival, Datek Online Holdings Corp, for US$1.29 billion in stock, the companies said.
The acquisition, which comes amid a slump among online brokerages, ends a fierce, bidding war of months for control of Datek as rival suitors bid up Datek's price by nearly 100 percent.
Indeed, Datek had originally been valued by analysts at only about US$700 million, but bidders like Ameritrade, E-Trade Group, Wells Fargo, Bank of America and TD Waterhouse, the subsidiary of TD Bank of Toronto, ratcheted up the price during several intense rounds of bidding, spurred by the pressures of a consolidating marketplace. Ameritrade and E-Trade are the nation's only publicly traded online brokerages.
With only a handful of takeover targets left among the online brokerages, Datek, based in Jersey City, New Jersey, became an especially sought-after prize among its rivals.
It is unclear, however, how the market will receive the high-priced acquisition, especially as Ameritrade, based in Omaha, Nebraska, just warned on Friday that its earnings in the second quarter would fall at the low end of its forecast. If it is any indication, the Bank of Montreal recently paid US$520 million for CSFBdirect, the online brokerage of Credit Suisse First Boston million, and was widely condemned by analysts and shareholders for overpaying for CSFBdirect.
On a cost-per account basis, Ameritrade is paying an even higher premium -- more than US$1,500 an account -- than the Bank of Montreal did, analysts said. The Bank of Montreal paid US$1,113 per account.
If the transaction is completed, Ameritrade would have annual revenues of US$800 million and US$43 billion in client assets in about 2.7 million online brokerage accounts.
"This announcement marks an extraordinary advancement in Ameritrade's 27-year history of building a premier financial institution in the online brokerage industry," said J. Joe Ricketts, the company's chairman and founder. "I am particularly excited by the strength of the experience, shared vision and financial sophistication that we expect our new board of directors to bring in support of our management's focus on ensuring that the company delivers on its full potential."
Datek is privately owned and is controlled by a consortium led by Bain Capital Inc, which bought it a year and a half ago for about US$700 million. Other investors include the private investment firms TA Associates, Silver Lake Partners and Advent International.
The investors decided to put the company up for sale early this year after Datek paid US$6.3 million to settle federal charges that its former day trading unit engaged in securities fraud in the 1990's.
The Securities and Exchange Commission accused the company's former day trading unit, Datek Securities, of making hundreds of millions of dollars in profits by engaging in illegal trading practices and fraudulent bookkeeping. The fine was among the largest ever paid by a brokerage firm.
Datek Online, the online brokerage firm that evolved out of a day trading unit, was not implicated.
Under the deal announced late Sunday night, the Ricketts family would own 27.6 percent of Ameritrade's common stock. Bain Capital would own about 10.7 percent and other investors in Datek would have smaller holdings.
‘ABUSE OF POWER’: Lee Chun-yi allegedly used a Control Yuan vehicle to transport his dog to a pet grooming salon and take his wife to restaurants, media reports said Control Yuan Secretary-General Lee Chun-yi (李俊俋) resigned on Sunday night, admitting that he had misused a government vehicle, as reported by the media. Control Yuan Vice President Lee Hung-chun (李鴻鈞) yesterday apologized to the public over the issue. The watchdog body would follow up on similar accusations made by the Chinese Nationalist Party (KMT) and would investigate the alleged misuse of government vehicles by three other Control Yuan members: Su Li-chiung (蘇麗瓊), Lin Yu-jung (林郁容) and Wang Jung-chang (王榮璋), Lee Hung-chun said. Lee Chun-yi in a statement apologized for using a Control Yuan vehicle to transport his dog to a
Taiwan yesterday denied Chinese allegations that its military was behind a cyberattack on a technology company in Guangzhou, after city authorities issued warrants for 20 suspects. The Guangzhou Municipal Public Security Bureau earlier yesterday issued warrants for 20 people it identified as members of the Information, Communications and Electronic Force Command (ICEFCOM). The bureau alleged they were behind a May 20 cyberattack targeting the backend system of a self-service facility at the company. “ICEFCOM, under Taiwan’s ruling Democratic Progressive Party, directed the illegal attack,” the warrant says. The bureau placed a bounty of 10,000 yuan (US$1,392) on each of the 20 people named in
The High Court yesterday found a New Taipei City woman guilty of charges related to helping Beijing secure surrender agreements from military service members. Lee Huei-hsin (李慧馨) was sentenced to six years and eight months in prison for breaching the National Security Act (國家安全法), making illegal compacts with government employees and bribery, the court said. The verdict is final. Lee, the manager of a temple in the city’s Lujhou District (蘆洲), was accused of arranging for eight service members to make surrender pledges to the Chinese People’s Liberation Army in exchange for money, the court said. The pledges, which required them to provide identification
INDO-PACIFIC REGION: Royal Navy ships exercise the right of freedom of navigation, including in the Taiwan Strait and South China Sea, the UK’s Tony Radakin told a summit Freedom of navigation in the Indo-Pacific region is as important as it is in the English Channel, British Chief of the Defence Staff Admiral Tony Radakin said at a summit in Singapore on Saturday. The remark came as the British Royal Navy’s flagship aircraft carrier, the HMS Prince of Wales, is on an eight-month deployment to the Indo-Pacific region as head of an international carrier strike group. “Upholding the UN Convention on the Law of the Sea, and with it, the principles of the freedom of navigation, in this part of the world matters to us just as it matters in the
RSS