FOCUS-National Discount sets deal with Go2Net, Allen
(recasts, adds analyst's, CEO's comments, details throughout)
By Jack Reerink
NEW YORK, Feb 7 (Reuters) - National Discount Brokers Group Inc. (NYSE: NDB) said on Monday it would become the exclusive brokerage service on Go2Net Inc. (NASDAQ: GNET), and said the Web site's network and its major stakeholder, Microsoft co-founder Paul Allen, would buy up to $30 million of the brokerage's stock.
National Discount, which is based in Jersey City, N.J., signed a three-year deal to have its NDB.com online brokerage subsidiary provide services to Go2Net's Web properties, which include the popular investing site Silicon Investor. NDB.com, which currently has 200,000 accounts, will pay Go2Net $7.5 million a year, subject to certain performance guarantees, for the exclusive rights.
As part of the deal, Go2Net and Allen's investment firm, Vulcan Ventures Inc., agreed to buy up to 1 million National Discount shares. Go2Net and Vulcan, which owns about one-third of Go2Net, will buy 500,000 shares at $27 apiece and receive warrants to buy an additional 500,000 shares at $33 apiece.
Go2Net's chief executive, Russell Horowitz, will join Nation Discount's board of directors.
"Today marks a historic agreement for National Discount Brokers," Chairman Dennis Marino said in a statement. "It provides us with access to the robust Go2Net Network, and in particular, the sophisticated membership base of Silicon Investor."
National Discount's stock price gained 2-1/4 to 26-1/16 in early afternoon trading on the New York Stock Exchange. Go2Net's stock price gained 9/16 to 83-1/2 on the Nasdaq.
"It's a great deal for National Discount," said analyst Jim Marks of investment bank Credit Suisse First Boston. "Getting Paul Allen and Vulcan to put their name behind this is a big validation of their place in the market."
Hooking up with Silicon Investor, which has 250,000 active members, should be a boon for National Discount, Marks said. NDB.com and Silicon Investor will integrate their sites in the coming months.
"It gives them the best online investment discussion availability of any broker," Marks said.
National Discount is likely to get at least 75,000 new accounts through the deal's three-year term, Marks estimated.
siliconinvestor.com |
