E*Trade U.K., which launched in 1999 as a joint venture between E*Trade and U.K.-based Electronic Share Information, will operate as a wholly owned subsidiary providing personalized online financial services to the U.K. market, the company said.
Under the terms of the agreement, shareholders of E*Trade U.K. will receive about 3.8 million shares of E*Trade common stock. At yesterday's closing price of $26.06, the deal would be worth about $100 million.
"The U.K. is a major European market and a magnet for foreign investment, and is therefore a crucial component of E*Trade's global business strategy," Judy Balint, chief international officer of E*Trade, said in a statement. "This acquisition of E*Trade UK is a critical step toward our goal of building the first global cross-border trading network for online investors."
The deal comes on the same day that rival Charles Schwab said it plans to buy financial firm U.S. Trust in an effort to extend its business to wealthy investors.
Online brokerages have been rushing to stake a presence internationally with expectations that online trading is likely to grow overseas. AmeriTrade, E*Trade, Charles Schwab and others have been cutting deals and forming partnerships with regional players overseas.
According to a recent survey conducted by research firm APCIMS/ComPeer, online trading activity in the United Kingdom tripled during the third quarter of 1999. Another survey conducted by Fletcher Internet Research Group noted that more than 4.2 million homes in the United Kingdom were connected to the Internet during 1999.
E*Trade recently formed strategic joint ventures in Germany, Denmark, Norway and South Africa. In August 1999, E*Trade also completed its acquisition of TIR Holdings, an international financial services company offering global multicurrency securities execution and settlement services as well as providing independent research to institutional investors.