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Ameritrade selling to CIBC?
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May 11, 2001: 4:21 p.m. ET
CIBC offering $9-to-$10 a share for nation's fourth-largest online broker
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NEW YORK (CNNfn) - Ameritrade Holding Corp., the nation's No. 4 online broker by volume, is in takeover talks with Canadian Imperial Bank of Commerce, CNNfn.com has learned.
CIBC is offering to pay between $9-to-$10 a share, or $1.8 billion for Omaha, Neb.-based Ameritrade (AMTD: up $0.60 to $8.56, Research, Estimates). However, the deal probably won't get done because the offer price is too low, a source familiar with the situation said.
Both CIBC and Ameritrade declined to comment on the negotiations which were first reported by USA Today.
Joe Ricketts, Ameritrade chairman and founder, owns more than 50 percent of the online broker and won't sell at $10, analysts said.
"At a right price, Ricketts would look to sell but that right price is closer to $20," said analyst Jim Marks, of CS First Boston.
Most of the brokers, which include Charles Schwab Corp., E*Trade Group, TD Waterhouse Group Inc. and Ameritrade, have been hit by declines in the broad market. Most have also announced a series of staff cuts as their shares have slumped.
In March, TD Waterhouse announced plans to cut employees through attrition while Schwab cut 11 percent of its total staff.
Ameritrade is still performing well though its stock price has dropped 60 percent in the past year, Marks said. "They are still generating 25 percent plus pre-marketing operating margins," he said. "The company is doing fine."
CIBC's offer of $10 a share is just a point of negotiation and probably not a final offer, said analyst Rich Repetto, of Putnam Lovell Securities Inc. "Ricketts believes there is more value in the company," Repetto said.
The only online brokers that could be looking to sell include E*Trade (EGRP: Research, Estimates), Datek Online Holding and Ameritrade (AMTD: up $0.60 to $8.56, Research, Estimates) Schwab (SCH: down $0.29 to $19.76, Research, Estimates), the nation's biggest online broker according to volume, would be too expensive for any but the largest banks and then a purchase would be dilutive, CSFB's Mark said.
New York-based TD Waterhouse (TWE: down $0.13 to $11.55, Research, Estimates) is owned by the Toronto Dominion Bank which probably won't let it go, analysts said. Deutsche Bank AG bought the National Discount Brokers Group Inc. last October, paying $1.02 billion, or $49 a share, NDB's 20.9 million shares outstanding.
In December, Datek sold a majority stake to Bain Capital for $700 million.
However, E*trade, Datek and Ameritrade will probably not get a good price if they sold now. "For those three, there is a disconnect between what the market is willing to pay and what the companies think they are worth over the long haul," Marks said. 
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