NEW YORK - Online brokerage and bank E*Trade Financial Corp. (NYSE:ET - News) will sell the operating unit for its network of 15,000 ATMs for $106 million in cash to privately-held ATM operator Cardtronics Inc.
E*Trade said the sale will result in a pre-tax gain of $55 million.
"While we believe that the ATM network is an important distribution channel for our customers, we have determined that operating an ATM network is not essential to providing this customer benefit," Mitchell Caplan, E*Trade's chief executive, said in a statement.
The purchase will more than double Cardtronics' current network of some 12,000 ATMs, which includes machines in retail stores and gas stations in all 50 states.
In March, Cardtronics filed with U.S. regulators to raise as much as $115 million in an initial public offering. Cardtronics did not detail the price or amount of shares it would offer. Credit Suisse First Boston, Bear Stearns, Wachovia Securities and William Blair & Co. are to underwrite the offering.
E*Trade said it will retain branding rights for the machines under the deal.
E*Trade plans to continue to offer its banking customers surcharge-free ATM access by refunding ATM fees incurred at any ATM worldwide. The company is also exploring deposit taking options at E*Trade Financial Centers as well as directly from customer homes and places of business.
"Check truncation legislation is changing how companies look at deposit taking," said Arlen W. Gelbard, E*Trade Bank's chief banking officer and president. "We will be at the forefront of this change. Our goal is to provide our customers with deposit taking capabilities that surpass traditional standards for convenience and speed."
E*Trade bought 9,000 ATMs through its purchase of Card Capture Services Inc. four years ago.
Citigroup Inc. (NYSE:C - News) advised E*Trade on the transaction.
