E*TRADE to acquire Tradescape

Discussion in 'Retail Brokers' started by Cdntrader, Apr 10, 2002.

  1. 19 ET E*TRADE acquires Tradescape (ET) 9.05 +0.09: -- Update -- ET makes it official: company announces acquisition of Tradescape for $100 mln in stock with an additional $180 mln in stock contingent on unit's performance; ETrade says deals adds more than 100,000 trades per day and will be immediately accretive, and will add up to 10% to 2003 EPS.
     
  2. E*TRADE Financial to Acquire Technology From A.B. Watley for $105 Million and Tradescape,
    - Acquisitions Allow E*TRADE Financial to Further Strengthen Diversification Strategy by Delivering Best of Breed in Onsite and Online Technology for Active Traders - Purchases Enhance and Leverage E*TRADE Financial Multi-touchpoint Strategy - Deal Will Be Immediately Accretive and Adds More Than 100,000 Trades Per Day
    MENLO PARK, Calif., Apr 10, 2002 /PRNewswire-FirstCall via COMTEX/ -- E*TRADE Group, Inc. (NYSE: ET chart, msgs) today announced a definitive agreement to acquire privately held Tradescape(1), a leading onsite active-trading platform, for $100 million in common stock. Also announced today is the acquisition of online trading technology from A.B. Watley, valued at $5 million. The combined acquisitions advance E*TRADE Financial's diversification strategy, enabling the Company to continue growing its leadership position within the active customer segment by providing active traders a superior value proposition through innovative onsite and online technology.
    Today's announcements allow a broader customer base to leverage E*TRADE Financial's many touchpoints, including its flagship E*TRADE Financial New York Center and the 20 Tradescape locations, providing active traders increased access to E*TRADE Financial's diversified offerings. The Company's multi-touchpoint strategy combined with the newly acquired Tradescape technology platform, powered by LightSpeed(TM), will allow E*TRADE Financial to further enhance its Power E*TRADE offering for the active trader segment.

    "E*TRADE Financial is rigorously disciplined in the execution of our very focused business model and acquisition strategy. It is based on finding those opportunities which are priced right for the marketplace and that add significant value to the Company, our shareowners and our stakeholders," said Christos M. Cotsakos, Chairman of the Board and Chief Executive Officer, E*TRADE Group, Inc. "We have the currency and resources for selective, disciplined acquisitions, allowing us to look at all opportunities, but select only the best. Through the strategic acquisitions of Tradescape and the A.B. Watley technology, at the right price and on the right terms, E*TRADE Financial is solidly positioning itself as a leading provider of active trading services."

    The online trading technology from A.B. Watley provides the data delivery and presentation layer portions that power parts of the Company's Power E*TRADE Pro product, giving E*TRADE the ability to independently manage all aspects of its Power E*TRADE offering. This transaction, coupled with Tradescape, will enable E*TRADE Financial to provide its active customers with the best of breed in onsite and online technology as it continues to combine features to develop the best solution for active traders.

    "By acquiring enhanced product offerings and proprietary technologies, and by significantly increasing the number of transactions per day to over 200,000, E*TRADE Financial continues to accelerate our vision of becoming a global leader in the delivery of innovative and integrated personalized financial services to meet the unique needs of customer households and specific market segments," continued Cotsakos.

    The Tradescape acquisition is expected to be slightly accretive to E*TRADE Financial earnings this year, within the Company's current 2002 guidance, with an expected accretion of up to 10 percent to 2003 earnings per share from ongoing operations, including any payments associated with the contingent consideration.

    The terms of the Tradescape deal include $100 million in common stock and additional contingent stock consideration of up to $180 million. The additional contingent consideration will become payable on a pro-rated basis only if Tradescape business exceeds certain aggressive earnings targets and revenue goals for the remainder of 2002 and all of calendar year 2003.

    "Tradescape delivers incremental revenue at attractive margins and positions E*TRADE as a leader in daily average transactions," said Jarrett Lilien, Chief Brokerage Officer and Managing Director, Asia Pacific and Latin America, E*TRADE Group, Inc. "The performance-driven contingent stock consideration helps to ensure the value proposition of the deal in accordance with our disciplined acquisition strategy. Over a period of months, we have explored numerous alternatives and firmly concluded that the acquisition of Tradescape is the ideal choice."

    The Tradescape acquisition includes the purchase of Momentum Securities, LLC, an onsite brokerage firm for individual professional traders, Tradescape Securities, LLC, a direct access brokerage firm for active online traders and Tradescape Technologies' high-speed direct access trading software, technology and network services. The acquisition does not include Market XT, which remains a subsidiary of Tradescape Corp.

    "E*TRADE Financial is the perfect home for Tradescape," said Omar Amanat, Chief Executive Officer, Tradescape. "We are delighted to be joining such a fully integrated financial services provider that shares a similar philosophy of speed and excellence in trade execution. We look forward to leveraging their professionalism and strong brand, while contributing expertise and technologies that will be key elements in growing this active trader customer segment going forward."

    Building on its efficient operating platform, the acquisition of these combined technologies provide E*TRADE Financial a powerful capability, delivering an increasingly dynamic real-time trading experience to its active traders. By acquiring the ability to control its own future in the active market, E*TRADE Financial is well positioned to seize opportunities that make strategic sense for its customers, shareowners and stakeholders, while also reinforcing its commitment to driving future growth among our core business lines.

    The Tradescape transaction is subject to customary regulatory and closing conditions and is expected to be completed in the third quarter of 2002. Each of the acquisitions will be discussed in further detail during the Company's upcoming first quarter 2002 earnings conference call scheduled for April 17, 2002.

    About E*TRADE Financial

    E*TRADE Financial brings together a personalized and fully integrated financial services solution that includes investing, banking, lending, planning and advice. Delivered in a multi-touchpoint platform, the products, services, content and information at E*TRADE Financial are available to customer households through E*TRADE Financial Centers, Zones, ATMs and branded web sites throughout the world. Securities products and services are offered by E*TRADE Securities, Incorporated (member NASD/SIPC), bank products and services are offered by E*TRADE Bank (member FDIC), mortgages are offered by E*TRADE Mortgage Corp., and E*TRADE Financial Advisor is a service of E*TRADE Advisory Services, Inc., an investment adviser registered with the SEC.

    Important Notice

    E*TRADE, the E*TRADE logo and Stateless Architecture are registered trademarks of E*TRADE Group, Inc. or its subsidiaries. The statements contained in this news release that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. The uncertainties and risks include, but are not limited to, changes in market activity, anticipated increases in the rate of new customer acquisition, the conversion of new visitors to the site to customers, seasonality, the development of new products and services, the enhancement of existing products and services, competitive pressures (including price competition), system failures, economic and political conditions, changes in consumer behavior and the introduction of competing products having technological and/or other advantages. Further information about these risks and uncertainties can be found in the information included in the annual report filed by E*TRADE Group, Inc. with the SEC on Form 10-K (including information under the caption "Risk Factors") and quarterly reports on Form 10-Q.

    (1) The Tradescape acquisition includes the purchase of Momentum Securities, LLC, an onsite brokerage firm for individual professional traders, Tradescape Securities, LLC, a direct access brokerage firm for active online traders and Tradescape Technologies' high-speed direct access trading software, technology and network services. The acquisition does not include Market XT, which remains a subsidiary of Tradescape Corp.
     
  3. And someone said that TS was going down and may be out of business within weeks. Now they just sold for 100,000,000. This business is whacked.
     
  4. edit Watley technology was bought for $5 million not $105 million.

    Tradescape was bought for $100 million in common stock and additional contingent stock consideration of up to $180 million.
     
  5. Yes 105,000,000 total ...100 for TS and 5 for AB plus the future contingent consideraton.
     
  6. Banjo

    Banjo

    I think TS owns all of LSPD, if so that's where the value lies. May be wrong though.
     
  7. LSPD is marketXT. Isn't that owned by a consortium of Larger investment bank/brokerages?
     
  8. The deal specifically said that it did not include MarketXT.
     
  9. Banjo

    Banjo

    DATT , you're right, just read it thru, lotta bucks for not including it.
     
  10. I have to agree. What could Etrade be thinking?? Tradescape is basically marketXT. The number of traders they had were pitiful, and the software, while excellent, not worth more than 2 million MAX. I am sure many prop owners can attest to that. I guess at this point, Etrade is dying to expand their cutomer base.. but really screwed up on this one in my opinion.

    Hey Don, if Etrade bought Tradescape without MarketXT for this absurd amount, i guess you should sell immediately. Your taxes may jump from 6 figures to 8 :D
     
    #10     Apr 10, 2002