The WSJ reported today that Etrade and Ameritrade are in merger talks. The WSJ reported:
By SUSANNE CRAIG and DENNIS K. BERMANAugust 22, 2007; Page A1
The online brokerage industry, which underwent a wave of consolidation after the bursting of the dot-com bubble, may be headed for another shakeout, with giants TD Ameritrade Holding Corp. and E*Trade Financial Corp. holding merger discussions.
A merger of the two online brokers would create a dominant player in what has been a highly fragmented industry, with dozens of smaller companies battling for market share. As a result, it could reduce some of the fierce competition that has benefited consumers by driving down the cost of online trading but has squeezed the industry by chipping away at its profit margins.
As of the end of June, E*Trade had 4.7 million brokerage and banking accounts, TD Ameritrade had 6.3 million such accounts, and Charles Schwab Corp., now the largest online broker, had about 6.9 million. Merrill Lynch & Co., in contrast, has more than 7 million customer accounts.
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.
Still, sources close to the negotiations say the quality of E*Trade's mortgage portfolio is an issue TD Ameritrade is watching closely.
See complete article at, http://online.wsj.com/article_print/SB118774911334904929.html