Online broking firm Ameritrade is to acquire Datek Online for $1.3 billion in stock, closing a three-month auction which saw intense bidding from rival brokers E*Trade and TD Waterhouse.
The deal, agreed Sunday, gives Ameritrade much-needed scale as it bids to hold its own during an ongoing industry slump. The company now claims some 2.7 million accounts, just shy of E*Trade and TD Waterhouse. Average daily trading volumes at the combine firm will be in the region of 164,000, second only to Charles Schwab according to Salomon Smith Barney research.
Under the agreement, Ameritrade will issue slightly more than 200 million shares to Datek's current owners - a consortium of private equity firms headed by Bain Capital. The transaction excludes Datek's cash or regulatory capital, valued at about $200 million, and its ten per cent stake in Island ECN.