Schwab CEO: Any Potential Acquirer Of E*Trade Would Have Issues To Evaluate
July 22 2011 - 1:17PM
Dow Jones News
Charles Schwab Corp. (SCHW) Chief Executive Walt Bettinger said
any potential acquirer of E*Trade Financial Corp. (ETFC) would have
many issues to address in such a deal.
Speaking at Schwab's business update for institutional
investors, Bettinger said factors in an E*Trade deal would include
"the purchase price of the transaction, capital holes that need to
be filled under purchase accounting rules, the dependency of the
transaction and the vulnerability it would create."
Earlier this week, E*Trade disclosed that it received a letter
from Citadel LLC, its largest shareholder, requesting that it
explore a potential sale of the company. The letter asked E*Trade
to call a special shareholder meeting to discuss maximizing
shareholder value as well as remove two of its directors and hold
an election to choose independent replacements.
While E*Trade has a solid brokerage franchise, it is seen as an
acquisition candidate because of its bank's mortgage portfolio,
which posted heavy losses amid rising delinquencies, though credit
trends have improved in recent quarters.
Analysts have long suggested E*Trade's main rivals Schwab and TD
Ameritrade Holding Corp. (AMTD) could be candidates to buy the
firm, though Schwab is in the midst of completing its own purchase
of optionsxpress Holdings Inc. (OXPS), slated to close in the third
quarter.
At the update, Bettinger also said Schwab is making progress
toward opening a handful of independent branch locations by the end
of 2011. Schwab unveiled its plan for such a push in February.
Bettinger said Schwab is "getting 10 to 12 leads a day from
people interested in opening those franchises." A slide in his
presentation said the company launched a website to "provide a
primary initial destination for candidates" and said it has nearly
500 leads collected.
Shares of Charles Schwab recently traded down 0.3% at $15.59.
The stock is down 9% year-to-date, but up 3.2% over the past 52
weeks.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com
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