E+Trade to Buy Wit's Retail Brokerage Arm
NEW YORK (Reuters) - Online broker E+Trade Group Inc. (NasdaqNM:EGRP - news) said on Monday it would buy online investment bank Wit Capital Group Inc.'s (NasdaqNM:WITC - news) retail brokerage unit and make Wit its exclusive provider of new share issues.
New York-based Wit, for its part, would buy E+Trade's Internet investment banking unit, E+Offering, for 32 million shares. Based on Wit's closing stock price of 10 1/4, this acquisition is worth $328 million.
E+Trade, in Menlo Park, Calif., would buy the retail brokerage arm of Wit Capital's Wit SoundView division, which has about 100,000 accounts, and also buy 2 million Wit shares, worth $20.5 million. This would give E+Trade's 2.6 million customers access to research and the opportunity to buy new stock issues. Wit would become E+Trade's source for new and follow-on stock offerings.
E+Trade, together with Softbank Group (9984.T) and General Atlantic, a major investor in E+Trade and E+Offering, would together own over 25 million shares of Wit Capital Group, about 20 million of which would be have a three-year restriction on sale. E+Trade Chairman and Chief Executive Christos Cotsakos and Bill Ford of General Atlantic Partners would join Wit Capital's board.
Wit SoundView's acquisition of E+Offering is expected to close in the third quarter this year. E+Trade's stock rose 1/4 to 20 1/16 while Wit Capital's stock rose 5/16 to 10 9/16. |
