MENLO PARK, Calif. -- E*Trade, the parent company of E*Trade Bank and the E*Trade Access ATM network, announced its intention on May 21 to buy Web Street, the parent company of online brokerage firm Web Street Securities, in an all-stock transaction valued at about $45 million.
According to Business 2.0, E*Trade will get Web Street Securities' 34,000 active accounts, including 6,300 accounts held by German residents. It also lands the company's offices in San Francisco, Boston, Beverly Hills, Calif., and Denver, which E*Trade plans to convert into financial centers, according to a statement by the two companies.
The transaction is expected to increase E*Trade's earnings and add about $25 million to its annual revenue as soon as the companies close the deal. E*Trade will pay about $25 million to acquire the brokerage business and accounts, and about $20 million for the offices, cash on hand, and net operating losses, according to Business 2.0.
In April, E*Trade reported revenue of $330 million, down 21 percent from the same quarter last year, but it broke even, as Wall Street had expected. E*Trade also lowered its revenue and profit forecasts for 2001 to between break-even and 5 cents a share. Analysts had been expecting a profit of 13 cents a share.
E*Trade Access recently signed an agreement to become the exclusive ATM provider for Target stores.
