Ameritrade's Rich Ransom

A long-predicted move toward consolidation in the online brokerage sector began Wednesday with Ameritrade's(AMTD Quote) $2.85 billion all-stock acquisition of TD Waterhouse.

The deal is an expensive one for Ameritrade, which is trying to fend off a semi-hostile takeover attempt by its heretofore bigger rival, E*Trade(ET Quote). Including a special $6 cash dividend to its shareholders -- a gift that will be funded mostly through borrowed money -- the company will oversee the transfer of more than $5 billion in value when all is said and done.

TD Bank Financial, the parent of TD Waterhouse and a division of Canada-based Toronto Dominion(TD Quote), will initially own 32% of the new company, which will be called TD Ameritrade. ...