Goldman Sachs is to acquire Ameritrade's interest in Epoch Partners, an online investment bank established in November 1999 as a joint venture with Charles Schwab, and TD Waterhouse Group. Terms of the transaction were not disclosed.
Through the acquisition, Goldman Sachs will obtain the exclusive right to distribute equity offerings, including IPOs, to Charles Schwab and TD Waterhouse customers. In addition, customers of these firms will receive access to US equity research from Goldman Sachs. Together, Schwab and TD Waterhouse have nearly 10 million active accounts and approximately $1 trillion in customer assets.
"This is a next step in our strategy to develop new distribution channels by leveraging technology," says Henry Paulson, chairman and chief executive officer of Goldman Sachs. "Epoch provides us exclusive access to the important individual investor segment through one of the largest brokerage networks in the United States, together with sophisticated data management analytics, both of which will further enhance our market leading equity business."
For Ameritrade the deal represents an opportunity to rethink its business, which has been badly hit by the downturn in dotcom stocks and initial public offerings. Joe Moglia, CEO of Ameritrade, comments: "This is a time of transition for both Ameritrade and Epoch. In the coming weeks, we will be announcing a realignment of Ameritrade's organisation around our client base. Monetizing our investment in Epoch enables us to deliver immediate value to our shareholders and allows us maximum flexibility to assess all options at our disposal. One of those options would be to decide how best to deliver IPOs."
Ameritrade expects the transaction to close in 30 to 60 days, after customary approvals are obtained from the regulatory authorities.