E*Trade Shares Up as Deal Talk Returns

E*Trade shares surged on Thursday as talk about potential takeover interest on TD Ameritrade's part surfaced again, causing volumes to spike.
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NEW YORK (TheStreet) -- It's the deal that won't die.

Shares of

E*Trade Financial

(ETFC) - Get Report

were surging late Thursday morning as takeover talk involving the online broker bubbled up again. The chatter was stoked by comments

TD Ameritrade

(AMTD) - Get Report

CEO Fred Tomcyzk made to

Reuters

that the company is

"open-minded"

about using its cash for either an acquisition, share buyback or dividend payout.

If that sounds familiar, it's because it's almost exactly what Tomczyk

said back in November 2009

, that time at an industry conference sponsored by

Reuters

.

When asked specifically about E*Trade, Tomcyzk gave an answer in this most recent interview that was very similar to what he said last time around; that TD Ameritrade would be interested in any deal that makes "strategic and financial sense." In November, his comment was that any deal involving E*Trade would have to be on the "right terms with the right structure."

E*Trade's stock was rising 7.7% to $1.83 in recent trades. Volume of 62.4 million was already well above the issue's trailing three-month daily average of 37.8 million, so traders are definitely running with the comments. The move above $1.80 was the stock's first since Jan. 20.

Still, there's no reason to believe that TD Ameritrade is any closer to making a play for E*Trade now than it's ever been. Tomczyk allowed that E*Trade appears to be making progress cleaning up its balance sheet, which is weighed down sour home-equity loans, saying they were on "better footing" than they were a year ago. But he didn't say the company was out of the woods.

"But that doesn't mean it's over," Tomczyk told Reuters. "They

E*Trade still have their issues to work out."

The action in TD Ameritrade shares may provide a better gauge of how seriously Wall Street is taking the prospect of a deal as the stock is up a modest 1.5% to $20.49 on comparatively light volume.

First-quarter results still lie ahead for both E*Trade and TD Ameritrade, but another big player in the group,

Charles Schwab

(SCHW) - Get Report

, reported its numbers before Thursday's opening bell.

Schwab came in a penny short of Wall Street's profit expectations as revenue tumbled 12% on a year-over-year basis, although San Francisco-based company did say it believes the "worst of the environmental pressure" on its topline is behind it.

>> Who Owns ETFC?: Tiger Global

The

E*Trade acquisition debate

last got ramped up on April 6 when Keefe, Bruyette & Woods put out a note that looked at the financial scenarios under which TD Ameritrade or Charles Schwab might make such a deal. But the firm was careful to note that it didn't believe any transaction, which it determined would be vastly complicated, was imminent.

--

Written by Michael Baron in New York

.