E*TRADE FINANCIAL TO ACQUIRE HARRISdirect for $700 MILLION CASH; HIGHLY ACCRETIVE TRANSACTION ACCELERATES COMPANY'S STRATEGIC GOALS
New York, August 8, 2005—E*TRADE FINANCIAL Corporation (NYSE: ET) today announced it will acquire the US-based online brokerage operations of Harrisdirect from BMO Financial Group (TSX, NYSE: BMO) for $700 million in cash. The transaction is expected to deliver pre-tax operating synergies of approximately $186 million, which will be comprised of $114 million in expense synergies and $72 million in revenue synergies. After completing integration, on a full-year run rate basis, the deal is expected to generate $0.17 earnings per share in accretion. The Company expects to achieve full-year run rate synergies nine months after close.
"With the acquisition of Harrisdirect, we take a strategic step in further evolving our franchise. We accelerate our growth goals by extending our asset gathering strategy and fully leveraging customer cash, order flow and borrowing relationships across our integrated platform," said Mitchell H. Caplan, Chief Executive Officer, E*TRADE FINANCIAL. "We will continue to actively pursue opportunities that enable us to further build out our distinct business model."
With the integration of approximately 430,000 active high-value customer accounts, with an average account balance of over $70,000, E*TRADE FINANCIAL will gain $32 billion in assets, $5 billion in cash, $1 billion in margin debt balances and approximately 15,000 trades per day - all of which can be uniquely monetized by the retail and institutional components of E*TRADE FINANCIAL's integrated business model. In addition, E*TRADE has obtained marketing rights to over 300,000 additional customer accounts.
Upon the deal closing, E*TRADE FINANCIAL will have:
Approximately 130,000 daily average revenue trades (DARTs);
Over 4 million customer accounts;
Approximately $130 billion in customer assets;
Total customer cash and deposits of $24 billion;
Over $3.2 billion in average margin debt.
"We look forward to integrating the best solutions from each company to deliver highly competitive, value-added products and services to our customers," said R. Jarrett Lilien, President and Chief Operating Officer, E*TRADE FINANCIAL. "The addition of Harrisdirect's world-class customer service skills will strengthen our competitive position in the marketplace."
"Harrisdirect clients have benefited from innovative solutions and award-winning customer service that has distinguished the Harrisdirect brand. Under the E*TRADE FINANCIAL banner, they will benefit from an expanded breadth of product capabilities and product enhancements that E*TRADE will provide, given its significant scale and market presence," said Tony Comper, President and Chief Executive Officer, BMO Financial Group.
E*TRADE FINANCIAL's acquisition of Harrisdirect strengthens the franchise, increases its customer base in the serious investor segment and expands its opportunity to leverage a larger customer base across investing, cash and credit solutions.
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E*TRADE FINANCIAL TO ACQUIRE HARRISdirect
1 reply to this topic
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