E*Trade staying independent, despite Citadel pushing for sale

Off the block.

E*Trade Financial said late Thursday that its board had decided staying independent was the company’s best option after being advised to put itself up for sale earlier this year. Hedge fund firm Citadel Investments, E*Trade’s largest shareholder with a 9.8% stake, had been pushing for E*Trade to explore sale options since July as E*Trade has lagged the performance of its peers since 2007.

Citadel’s Kenneth Griffin, who is on E*Trade’s board, said management had not done enough to boost the company’s share price and also took issue with an earlier strategic review by JP Morgan (JPM), who had said in December 2010 that a sale was not the best option for the company. E*Trade has been a rumoured takeover target for years with brokerage rivals TD Ameritrade Holding (AMTD) and Charles Schwab (SCHW) often identified as potential suitors.

With no sale on the horizon, Citadel’s rocky relationship with E*Trade will continue. Citadel has been a shareholder since 2007 when it stepped in to rescue the company with a $2.5-billion cash injection after E*Trade took large mortgage losses in its banking unit.

E*Trade Financial (ETFC : NASDAQ : US$9.09), Net Change: -0.39, % Change: -4.11%, Volume: 26,174,698

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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