Shares of E*Trade Financial (NASDAQ:ETFC) soared more than 6% Monday morning in response to a report that TD Ameritrade (NASDAQ:AMTD) is pondering a takeover of the rival online brokerage.
According to The Wall Street Journal, TD Ameritrades board of directors plans to weigh a buyout bid at a meeting on Tuesday.
The report comes after Citadel, the hedge fund and E*Trades largest investor, publicly threw its weight behind E*Trade selling itself last week. In a Securities and Exchange Commission filing Monday, Citadel demanded E*Trade call a special shareholder meeting to talk about reviewing its strategic options.
New York-based E*Trade said late last week it formed a special committee and signed Morgan Stanley (NYSE:MS) to consider its options. E*Trade may need to put itself on the block because of heavy losses in its mortgage portfolio, which has offset solid gains on the brokerage side.
Ameritrade told the Journal the company will "often look at opportunities in the marketplace in terms of the financial or strategic value they could add to our firm and will continue to do so."
E*Trade directors are open to selling the company for the right price, the Journal reported. E*Trades market cap stands at $4.37 billion. Ameritrade directors have previously considered such a move, the paper reported.
Shares of E*Trade jumped 6.14% to $16.60 early Monday. TD Ameritrades stock gained 1.38% to $19.88.
Another potential partner for E*Trade could be Charles Schwab (NASDAQ:SCHW), but last week the company warned a potential deal would face a number of hurdles.