Tuesday, January 16, 2007

Etrade Takeover Speculation

Online broker E*Trade Australia Limited (ASX:ETR) rose 4% prior to an announcement yesterday. The company said CEO Brett Spork would depart in July. This has led to speculation of a takeover bid forcing shares to reach a six-year high. But the company has denied any knowledge of any offers. ANZ Banking Limited (ASX:ANZ) owns 35 per cent of the broker, while America's E*Trade Financial Corporation has seven per cent. Either could be a predator but I suspect that ANZ is the more likely company to commit to a takeover.

A recent post of mine explained how E*trades figures could boost ANZ's profit. I think ANZ has the tremendous growth that is available in this area and it is likely to want to have a larger stake. I have always liked E*Trade as a competitor to comsec and believe these two companies do/will hold the market share for years to come. ETR sits at a reasonabloe price to earnings of approx 12 on expected 2007 earnings. This news could push the company higher and I would not be surprised to see it trading around $4.00 - $4.20 if a takeover offer was put on the table.
Good Luck investing.

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