E*Trade (NDAQ:ETFC) and
Ameritrade
(NDAQ:AMTD) are reportedly mulling a potential merger, according to
several industry sources. The Wall Street Journal recently reported
that the number 3 and 4 brokerages were discussing a potential union
but were not close to a final offer. Many analysts and shareholders are
betting that tremendous value could be unlocked through a merger.
The
two companies have also found themselves under the fire of activist
hedge funds looking to unlock value. Jana Partners and SAC Capital have
both been pressuring the companies to pursue strategic alternatives and
unlock shareholder value. These cheerleaders could eventually push the
two companies towards a merger if they both remain convinced that it is
a good idea.
Together the two companies would becoming the
largest brokerage in the world with a combined value of $16.5 billion.
Interestingly, shares in both companies rose substantially on the news
and held their gains through today's trading. Whether or not these
rumors turn out to be true remains to be seen, but AMTD and ETFC are
definitely
stocks to watch!
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