E*Trade to buy JPMorgan's online brokerage BrownCo for $1.6bn

E*Trade to buy JPMorgan's online brokerage BrownCo for $1.6bn

New York-based E*Trade Financial is to buy rival online brokerage BrownCo from JPMorgan Chase for $1.6 billion in cash.

BrownCo provides online discount brokerage services and focuses on the active trader segment of the market. E*Trade says BrownCo's 200,000 customers have the second highest average account balances in the industry, exceeding $145,000 per account.

In a statement, the New York firm says the deal will generate pretax savings of about $154 million, including $91 million in cost savings and $63 million in revenue synergies, and will add around seven cents per share to its earnings within a year.

E-Trade says it will finance the transaction through about 65%-75% in common equity and mandatory convertible securities, with the rest coming from proceeds of senior notes.

Commenting on the acquisition, Mitchell Caplan, CEO, E*Trade Financial, says: "BrownCo is a premier brokerage asset and an ideal strategic fit for E*Trade Financial, accelerating the build out of our business model in this fast-consolidating industry."

The acquisition will be E*Trade's second in as many months - in August E*Trade said it was acquiring US online brokerage HarrisDirect from Canada's BMO Financial Group for $700 million in cash after it failed to buy rival online brokerage Ameritrade earlier this year.

Ameritrade later acquired TD Waterhouse USA from Canada's Toronto-Dominion Bank.

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