TD Ameritrade: Raising Funds for Possible E*Trade Deal

By Andrew Willis

We try not to be cynical, or simple-minded, in this space, so we’ll give TD Ameritrade (AMTD) the benefit of the doubt on its recent $1.25 billion (U.S.) bond financing.

It is surely a coincidence that the discount brokerage is out raising a truck load of debt just a few days after its CEO confessed that yes, he would consider buying troubled rival E*Trade Financial (ETFC) if the terms were right.

Don’t forget, just a few words on the possibility of an acquisition from TD Ameritrade brass lit a fire under E*Trade’s stock price. But there’s nothing to see here, just move along.

TD Ameritrade, which features Toronto-Dominion Bank (TD) as a minority shareholder, sold bonds on Friday in both the U.S. and Canadian markets.

The company raised $250 million selling three-year notes, $500 million with a five-year issue, and $500 million of 10-year debt. That is a whole lot of locked-in capital.

The underwriting was led by Bank of America/Merrill Lynch, Citigroup and TD Securities.

Comments

[CoverIsBetter]

Don't they have to give a reason for borrowing the additional money? Sure would be nice to see the loan application, see if it says "for the acquisition of ETFC".

What "fire under E*Trade’s stock" are you referring to? I am still waiting for that :-)

Thanks

2009 Nov 24 11:32 AM

[doodoo]

Hope all this click clack is going to come to something besides more click clack. Have been buying ETFC left and right. You guys keep pumping this buyout and I would think investors are paying attention. Your nuts are hanging out and I for one hope they don't get chopped off. I guess all good things come to those who wait. I have until April of next yr.

2009 Nov 24 11:35 AM

[redbeard20000]

I think it makes a lot more sense that they sold the bonds for the reasons they said... to retire other outstanding debt. They had a little more than 1.25 Billion in long term debt, most of which matured in 2012. The issuance of new debt allows them to spread out the maturity dates as well as get a lower interest rate. It was an easy way to increase the value of the company so they took it.

I really think AMTD is only interested in buying ETFC if they can get them at a discount. Considering the improved conditions at etrade, I doubt they will be distressed sellers and no deal will happen.

2009 Nov 24 11:38 AM

[dogtrack2]

It's Scottrade Pumpsters. Roger that!

2009 Nov 24 11:47 AM

[effeff63]

I took advantage of the recent flare-up in ETFC shares to write the April $2 and $2.50 calls (covered) since that seems to be about the
value in the stock after debt considerations. Does jaw-boning the
potential benefits of a merger with AMTD help ??? perhaps....

2009 Nov 24 11:48 AM

[oulmister]

With a buyout or not 2010 will be a huge recovery for etrade. The write downs will dwindle away and customer base will increase. If they arent bought by first q of 2010 the price will cost a potential buyer alot more, i think td amritrade will take them for 3 bucks a share soon , while they are cheap , if they wait 6 months they will pay 4-5 bucks a share

2009 Nov 24 01:56 PM

[Mr. Stupid]

what fire under Etrade stock?

HUH?

Mr. Stupid

2009 Nov 24 05:19 PM

[Erwin]

Seems like this stock is the favorite toy of the huge institutions
that trade for pennies on large computer originated programs. I hang on to the stock simply because
I'm an E.Trade customer and think it's great, and had
it not been for greed that everyone else got into the
banking&subprime business the stock would surely
be in the teens, where eventually, perhaps not in my
lifetime, it again will be.
Erwin

2009 Nov 25 09:24 AM

[swanpoint]

EKG blip, not fire.

2009 Nov 25 11:26 AM

[TheIndieWay]

Here's my two cents on etrade. I'm currently LONG and think that they will turn profit within the next two quarters about the same time the Option ARM / Alt-A crisis will be starting to blow up. Even though etrade sold thier toxic debt i think that the entire banking sector will sink down (guilty by association) in mid 2010 on to 2011 in which Ameritrade could buy them out (I hope they don't get bought out). However, Etrade also had record DARTs during the last sell-off and Option ARM / Alt-A could trigger another sell off which would give etrade more revenue with less bad debt thus driving the stock up. Who Knows? We'll have to sit back and play the waiting game.

2009 Nov 28 02:42 PM

[Al the pal]

The whole deal talk is too premature. No company is going to be able to justify to their shareholders taking over ETFC simply because of that huge pile of HELOC and other bad loans that they own. They are called toxic loans for a reason, no one wants them. Ameritrade sold the bonds to restructure their debt, plain and simple. Another block to a deal is Citadel. No one wants to climb in bed with Citadel as a partner, and Citadel would surely vote against any deal also, since they would then lose out on the juicy order flow deal they have with ETFC.

2009 Dec 14 03:39 AM

[Short seller]

Rumor has it Thornburg mortgage(THMRQ) is coming out of BK court and is being bought out by JPM. any info. would be helpful.

thanks

2009 Dec 18 02:19 PM