NEW YORK (AP) — Shares of E-Trade Financial Corp. surged yesterday after reports said that a larger rival was considering a bid for the online brokerage, just a few days after Citadel, its largest shareholder, urged E-Trade to consider putting itself up for sale.
Citadel, which rescued the online brokerage four years earlier with a $2.5 billion investment, currently owns about 9.8 percent of E-Trade’s common shares — about half the amount it owned at the beginning of the year.
Many investors believe TD Ameritrade would be a likely buyer for E-Trade and the two companies have even talked about a merger in the past but have been unable to agree to terms.
In recent years, however, Ameritrade officials have said E-Trade had too much questionable debt on its balance sheet to be acquired.
With buyout rumors buzzing, Ameritrade spokeswoman Kim Hillyer went on record Monday to say that any deal involving the Omaha, Neb. company would have to make both strategic and financial sense for shareholders.
Hillyer also said Ameritrade’s board is scheduled to hold a quarterly meeting on Tuesday, and the board regularly discusses the company’s strategy.
Christopher Maimone, an analyst with Standard & Poor’s, maintained his buy on E-Trade and raised his target price to $19 a share.
“We think [E-Trade’s] strategy will yield improving credit metrics and solid earnings growth,” he wrote in a research note.