Wit Capital Group
said Monday that it would buy privately held rival
for $328 million in stock. The move complements the online investment bank's purchase of
SoundView Technology Group
, the third-largest online brokerage firm and owner of a 28% stake in E*Offering, will buy the retail brokerage business of
, Wit Capital's online investment banking subsidiary, for $20.5 million. That business consists of about 100,000 accounts.
Under the terms of the agreement, New York-based Wit Capital will pay shareholders of San Francisco-based E*Offering 32 million of its shares, valued at $328 million, based on Wit's closing price Friday of 10 1/4. E*Trade Group, in turn, will buy 2 million shares of Wit Capital stock valued at $20.5 million.
General Atlantic Partners
, which has provided financing for E*Offering, will also buy two million shares of Wit Capital.
The transaction also provides for a strategic alliance between E*Trade and Wit SoundView, Wit Capital's online investment banking subsidiary. As part of the alliance, Wit SoundView will become the exclusive source of initial public offerings, follow-on offerings and other investment banking services for E*Trade's 2.6 million accounts.
Shares of Wit Capital rose 1/4, or 2%, to 10 9/16 in Monday morning trading, while E*Trade fell 1/16, or 0.32%, to 19 13/16. (Wit Capital closed up 1 5/16, or 13%, at 11 9/16 while E*Trade closed up 13/16, or 4%, at 20 5/8.)