Posted on: Friday, May 11, 2001

Canadian bank might buy Ameritrade

USA Today

NEW YORK — Canadian Imperial Bank of Commerce is in advanced talks to acquire Ameritrade, the nation's fifth-largest discount brokerage, for as much as $1.8 billion.

The deal, which could be unveiled before the end of the month, is expected to usher in a long-awaited round of consolidation in an online-brokerage industry, which has been beset by growing losses and widespread layoffs.

While negotiations still center on price, CIBC, Canada's second biggest bank, is said to be offering between $9 and $10 a share for Ameritrade — a big premium to yesterday's close of $7.96 but well shy of the 52-week high of $21.50.

Deep-pocketed CIBC is eager to buy Omaha-based Ameritrade to expand its reach in the United States and compete with hometown rivals such as Toronto Dominion Bank, which controls brokerage TD Waterhouse.

CIBC also wants to feed Ameritrade services through its Amicus electronic banking arm, which sells no-frills bank products through ATMs in large retailers such as Safeway supermarkets and Winn-Dixie stores. Amicus, which offers checking and savings accounts under names such as Safeway Select Bank and Marketplace Bank, aims to gain 3 million clients over the next five years, up from 550,000 now.

For Ameritrade founder and chairman Joe Ricketts, whose family owns almost 25 percent, a deal would come after weeks of unsuccessfully shopping the firm to online rivals, including Charles Schwab, E-Trade and Datek.

Almost 140 online brokers are fighting for the nation's 19.3 million accounts with an estimated $1 trillion in assets. Not surprisingly, Wall Street analysts expect no more than a dozen to survive the anticipated shakeout, particularly now that most full-service brokerage firms such as Merrill Lynch have added Web-based trading to their services.

Ameritrade has been particularly hard hit in the wake of a stock market rout that has severely dampened the appetite of online traders, reporting a loss of $54.2 million for the second quarter. To cope with the falling revenue, Ameritrade has announced plans to eliminate a total of 700 jobs this year, or nearly 25 percent of its work force, and to cut its whopping $200 million advertising budget by about $50 million.