(October 11) – “Don’t look for consolidation in the battered online-brokerage universe just yet,” writes Randall Smith in today’s Wall Street Journal.
“Tuesday’s news that Deutsche Bank AG was bidding nearly double the previous market price for the 84% of National Discount Brokers Group Inc. that it doesn’t already own sparked a brief flurry of interest in stocks of online brokers such as E*Trade Group Inc., Ameritrade Holding Corp. and TD Waterhouse Group Inc.”
“The $49-a-share offer, which values the entire company at roughly $1 billion, sent NDB’s stock price surging by $22.44, or 89%, to $47.69 at 4 p.m. in New York Stock Exchange composite trading Tuesday.”
“The online brokers have all been bloodied by a summer slowdown in online trading and a steep drop in the Nasdaq Composite Index, led by just the kind of New Economy dot-com stocks that used to fuel the dreams of online stock traders.”
“But after initially surging more than 10% Tuesday, the stocks retreated when traders realized that Deutsche Bank could be interested in NDB more as one of the few remaining independent Nasdaq market makers than as one of scores of online brokers.”
“When Deutsche Bank bought its 16% stake in NDB in March, the German company said its primary interest was NDB’s online-trading business. Since then, however, Merrill Lynch & Co. has bought market maker Herzog Heine Geduld Inc. (and said it plans to take its business global), and Goldman Sachs Group Inc. has bought Spear, Leeds & Kellogg LP, and that may have forced Deutsche Bank’s hand, analysts say.”