E*Trade to buy Web Street for $45 million
The online trading giant, on the hunt for new sources of revenue, says it plans to acquire its fellow online brokerage in a stock transaction worth $45 million.
Under the terms of the deal, the purchase will include Web Street's subsidiary Web Street Securities and its 34,000 active accounts, including 6,300 accounts held by German residents, as well as its offices in San Francisco, Boston, Denver and Beverly Hills, Calif.
The offices will be converted into E*Trade financial superstores, called E*Trade Centers.
The deal comes as online brokers try to survive a downturn in online trading as the economy has weakened. That economic weakness prompted E*Trade last month to lower its expectations for the next couple of years.
Like other online brokers whose main revenue comes from broker fees, E*Trade is looking to find new sources of revenue by diversifying its offerings.
E*Trade shares were at $9.19 early Monday morning, down 1 cent from Friday's close of $9.20 and far from their 52-week high of $21.87.
Chicago-based Web Street Securities provides customers in the United States and Europe with streaming, real-time quotes, quick trade confirmations and portfolio updates, and 24-hour customer services. Its stock was up 65 cents, or 81 percent, to $1.45 in early Monday morning trading.