Deal Accelerates E*TRADE's Asset Gathering Strategy and Delivers Significant
Scale
NEW YORK, Sept. 29 /PRNewswire-FirstCall/ -- E*TRADE FINANCIAL Corporation
(NYSE: ET) today announced its intention to acquire BrownCo, an online
brokerage service of JPMorgan Chase & Co. (NYSE: JPM) for $1.6 billion in
cash. The transaction is expected to deliver pre-tax operating synergies of
approximately $154 million, which will be comprised of $91 million in expense
synergies and $63 million in revenue synergies. These synergies, in
combination with BrownCo's approximate $80 million pre-tax operating income
and operating margins of about 40 percent, further strengthen the E*TRADE
FINANCIAL franchise. After completing integration, on a full-year run rate
basis, the deal is expected to be accretive to earnings by $0.07 per share.
The Company expects to achieve full-year run rate synergies nine months after
close.
E*TRADE FINANCIAL expects to finance the transaction through approximately
65-75 percent in common equity and mandatory convertible securities with the
remainder coming from proceeds of senior notes.
"BrownCo is a premier brokerage asset and an ideal strategic fit for
E*TRADE FINANCIAL, accelerating the build out of our business model in this
fast-consolidating industry," said Mitchell H. Caplan, Chief Executive
Officer, E*TRADE FINANCIAL. "The acquisition of BrownCo complements the recent
acquisition of Harrisdirect, by strengthening and extending our asset
gathering strategy with a strong customer demographic, while delivering
greater scale."
BrownCo's 200,000 customers have the second highest average account
balances in the industry, exceeding $145,000 per account. As of the date of
this announcement, E*TRADE expects to double its customer margin balance, with
BrownCo contributing approximately $3 billion to E*TRADE's anticipated
$3.2 billion margin account balance following the close of the Harrisdirect
acquisition. In addition, E*TRADE is expected to gain $29 billion in assets,
$3.4 billion in customer cash and approximately 28,000 daily average revenue
trades -- all of which can be uniquely monetized by the retail and
institutional components of E*TRADE FINANCIAL's integrated business model.
Upon the deal closing, E*TRADE FINANCIAL will have:
-- Nearly 4.3 million customer accounts
-- Approximately $160 billion in customer assets
-- Total customer cash and deposits of $27 billion
-- Over $6.2 billion in average margin debt
-- Approximately 160,000 daily average revenue trades (DARTs)
Investor Conference Call/Webcast
E*TRADE FINANCIAL will host a conference call for shareholders and
analysts this morning, September 29, 2005, at 8:30 a.m. EDT to discuss the
announcement. The conference call will be available to domestic participants
by dialing 1-877-434-1281 and 1-706-679-3933 for international participants. A
live audio webcast of this conference call will also be accessible at
https://investor.etrade.com/investors.cfm .
The call will be available by replay for two weeks from
September 29-October 13. The domestic dial-in number is 1-800-642-1687 and the
international dial-in number is 1-706-645-9291. The Conference ID for both is
1044686#.
About E*TRADE FINANCIAL
The E*TRADE FINANCIAL family of companies provide financial services
including trading, investing, banking and lending for retail and institutional
customers. Securities products and services are offered by E*TRADE Securities
LLC (Member NASD/SIPC). Bank and lending products and services are offered by
E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries.
About JPMorgan Chase
JPMorgan Chase & Co. is a leading global financial services firm with
assets of $1.2 trillion and operations in more than 50 countries. The firm is
a leader in investment banking, financial services for consumers and
businesses, financial transaction processing, asset and wealth management, and
private equity. A component of the Dow Jones Industrial Average, JPMorgan
Chase & Co. has its corporate headquarters in New York and its U.S. consumer
and commercial banking headquarters in Chicago. Under the JPMorgan, Chase and
Bank One brands, the firm serves millions of consumers in the United States
and many of the world's most prominent corporate, institutional and government
clients. Information about the firm is available at http://www.jpmorganchase.com.
Important Notices
E*TRADE FINANCIAL and the E*TRADE FINANCIAL logo are registered trademarks
or trademarks of E*TRADE FINANCIAL Corporation. 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, the activity of customers and assets held at the institution,
seasonality, the development and enhancement of 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 reports previously filed by E*TRADE Group,
Inc. or E*TRADE FINANCIAL Corporation with the SEC on Form 10-K (including
information under the caption "Risk Factors") and quarterly reports on Form
10-Q.
CONTACT:
E*TRADE FINANCIAL Media Contact
Pam Erickson
E*TRADE FINANCIAL Corporation
+1-617-296-6080
pam.erickson@etrade.com
E*TRADE FINANCIAL Investor Relations Contact
Adam Townsend
E*TRADE FINANCIAL Corporation
+1-703-236-8719
adam.townsend@etrade.com
SOURCE E*TRADE FINANCIAL Corporation
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Related links:
https:
//investor.etrade.com/investors.cfm
Related links:
http://www.etrade.com
CONTACT:
media, Pam Erickson, +1-617-296-6080, or
pam.erickson@etrade.com, or investors, Adam Townsend,
+1-703-236-8719, or adam.townsend@etrade.com, both of E*TRADE
FINANCIAL Corporation
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