E-Trade and Wit Capital, with Eye to Tech Market, Pool Investment Banking and Retail Brokerage

By Hunter, Matthew | American Banker, May 16, 2000 | Go to article overview

E-Trade and Wit Capital, with Eye to Tech Market, Pool Investment Banking and Retail Brokerage


Hunter, Matthew, American Banker


The online brokerage E-Trade, continuing its transformation into a diversified financial services company, on Monday said it would sell its investment bank to Wit Capital Corp. and receive in return Wit's retail brokerage business. The alliance puts E-Trade and Wit in a strong position to become a leading bank in Silicon Valley, though other online banks and full-service firms are paying close attention to the area, said Dan Burke, an analyst with Gomez Advisors in Lincoln, Mass. New York-based Wit agreed to pay $328 million for E-Offering, whose, shareholders would get 32 million shares of Wit Capital. The unit would be folded into Wit SoundView, an online investment bank started this year that focuses on underwriting new and secondary stock issues for Internet and technology firms. E-Trade, of Menlo Park, Calif., would acquire Wit's 100,000 retail brokerage accounts, which would give it 2.6 million accounts. E-Trade also agreed to buy two million shares of Wit Capital worth about $21 million. The transactions would open an exclusive new market for Wit's initial public offerings, research, and other services and expand the range of investment opportunities available to E-Trade's customer base. They would also give E-Trade access to Wit's institutional and corporate accounts. Ronald W. Readmond, Wit's president and co-chief executive officer, said in a press release that the deal would better position Wit SoundView "to compete successfully for lead manager roles in Internet and new technology offerings. …

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E-Trade and Wit Capital, with Eye to Tech Market, Pool Investment Banking and Retail Brokerage
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