I also woke yesterday morning to see this article on the front page of The Wall Street Journal called TD Ameritrade in Merger Talks with E*Trade which only surprised me for the length in between the previous mergers of these companies. It seems that E*Trade has a knack for announcing merger talks in the summer. You of course can read the article yourself to see what the experts think, but from a guy that lived and was relieved to not have stayed post the Harrisdirect merger I have a definite opinion on this based on my own experience.
- First of all, I'm not sure this is a slam dunk unless the combined company can figure out a way to appease the Toronto Dominion part of the TD Ameritrade company. As I recall when TD merged with Ameritrade one of the "benefits" to the American public was access to TD Banks. I don't think TD is going to walk away so easily unless the price is right.
- Speaking of Canadian Banks (Bank of Montreal owned Harrisdirect), they have an uncanny knack for buying low and selling high at least that's based on my experience so I'm sure there is a way out if the cash is right.
- While I'm sure this will face little regulatory objections, consumers are the ones that will be taking it on the chin. As more of these big advertising and big promotion companies start gobbling each other up, we will see less choice and less offers.
- Oh and you can bet that the combined online advertising budgets of these two will not be added together. They both compete pretty heavily against each other right now so there will be a definite marketing savings when these two merge. For example, they both are one of the Yahoo Quotes Results Page advertisers which probably cost each of them $7 - $10 million per year on just that package. BTW - according to ClickZ, E*trade was the #5 advertiser and TD was the #11 in online advertiser in April. Assuming they spend about the same in reality (the differences are really in the known errors in tracking and perhaps E*trade is slightly more efficient) half of those ad dollars will be GONE.
What's really upsetting to me is all of their employees who are now not sure what happens to their job. I remember when I was first brought over the wall to help with the transition I had a lot of feelings about what laid ahead for me and my friends. From that moment on people were really really scared about their next paycheck. What must be really frustrating is the inevitable separation of people who have to work on the merger and those that have to keep their heads in the sand and run the business, but hey those executives will cash in nicely so keep working.
I'm sure the PCFN-DLJdirect-CSFBdirect-Harrisdirect-E*trade merger binder will get used again especially if my old co-worker Lea is running the merger playbook again. In case any of those E*trade or TD Ameritrade employees need a good read on my own feelings at the end of my time with Harrisdirect, check out the following posts (I apologize that the formatting is off when I copied them over from my old Blogger site). Don't worry, everything will work out and who knows maybe you too can work on a Presidential Campaign; that's infinitely more exciting and more rewarding than selling trading accounts.