E*Trade and Ameritrade to Become One?

By Chris Crum - Mon, 05/09/2005 - 4:10pm.

The New York Times reported that E*Trade Financial offered to buy Ameritrade for $5.5 billion.

Shares of both companies got a boost on this unconfirmed news.

Bloomberg News reports:

Ameritrade shares surged $2.89, or 26 percent to $14.20 in 8:30 a.m. trading on the Inet ATS trading system before U.S. stock exchanges opened. E*Trade shares advanced 97 cents, or 8.1 percent, to $12.90.

Shares of E*Trade gained the most in more than two years on May 6 amid speculation that it was contemplating a merger with Ameritrade. The Times reported earlier today that E*Trade made its unsolicited offer for Ameritrade in a letter to the company's board. The Wall Street Journal also reported that E*Trade sent a letter to Ameritrade's board.

Many think that more online brokerage mergers will occur because it is getting harder for them to make money.

As of Friday, E*Trade's market value was $4.4 billion while Ameritrade's was $4.55 billion. If the two companies do merge, it will likely be an equal merger.

Chris is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.