Ameritrade Holding (AMTD) CEO Joseph Moglia has once again stepped into the role of dealmaker. On June 22, the hard-charging New Yorker said his Omaha firm would buy rival TD Waterhouse in a $2.9 billion deal. The news effectively ends E*Trade's (ET) efforts to buy Ameritrade.
Weak trading volumes and excess capacity have made it difficult for online brokers to go it alone. Moglia has benefited from consolidation, making seven acquisitions in four years. This deal is by far the largest for the former football coach, who will stay as head of the newly formed TD Ameritrade. The group will have more than $1.8 billion in revenues and will be No. 3 behind Fidelity Investments and Charles Schwab (SCH) in number of accounts. But the deal, which gives Ameritrade a major branch system and a larger share of the market for investment advice, won't necessarily be Moglia's last. "Don't assume that consolidation is over in the industry, and don't assume that it's over for Ameritrade," he says. As usual, Moglia is playing offense.
Securities & Exchange Commission Chairman William Donaldson's determination to win new limits on mutual funds may turn his farewell party into a donnybrook. On June 21, a federal appeals court ordered the SEC to review a rule, which Donaldson pushed through last year on a 3-2 vote, requiring 75% of mutual-fund directors, including the chairman, to be independent of the fund management company. The court faulted the SEC for failing to adequately consider alternatives or the costs the rule would impose on mutual funds. Although the SEC normally takes months to respond to such a ruling, Donaldson has scheduled a new vote on June 29 -- the day before his planned retirement from the agency. The likely result: another contentious 3-2 vote in which Donaldson sides with Democratic commissioners against his Republican colleagues.
The regulatory probes into Krispy Kreme Doughnuts' accounting may be heating up. On June 21, the Winston-Salem (N.C.) company said that six top officers resigned or retired after a special committee of independent directors determined they should be discharged. Krispy Kreme didn't disclose the reasons for the dismissals and did not identify the six. Analysts believe the company's willingness to cut the execs loose suggests that probes of Krispy Kreme's accounting for franchise repurchases by the Securities & Exchange Commission and the U.S. Attorney for the Southern District of New York could result in fines or criminal charges. A company spokeswoman declined to comment.
The universe of companies that offer traditional pension plans is shrinking faster. A study by benefits consultant Watson Wyatt Worldwide (WW) found that 11% of large companies that sponsor defined-benefit plans that pay a set amount to retirees had a frozen or terminated plan in 2004, up sharply from 7% in 2003 and 6% in 2002. The uptick reflects corporate uncertainty about the legal status of cash balance plans and the Bush Administration's proposals to force companies to increase funding for their plans, Watson Wyatt said.
Six months after buying the money-losing AMC Entertainment theater chain for $1.7 billion, private equity funds affiliated with JPMorgan Chase (JPM) and Apollo Advisors are merging the nation's second-largest chain with No. 5 Loews Cineplex in a $4 billion merger to cut overhead and refinance debt. The deal would give Loews' private-equity owners, including Bain Capital, Carlyle Group, and Spectrum Equity Investors, a 40% stake in the new company. The private-equity funds are hoping for a Hollywood ending, although the picture is looking dark now as DVDs continue to siphon off moviegoers.
-- Warren Buffett wants to invest more in energy, potentially in nuclear power.
-- EADS, the European space giant, will build a new plant in Mobile, Ala.
-- Homebuilder Lennar (LEN) reported a 21% jump in second-quarter earnings.
Ford Motor (F) shares fell 4.4%, to $10.68, on June 22, the day after it reduced its 2005 earnings forecast by 25 cents, to $1 a share. Lower U.S. sales also led Ford to lay off 1,700 salaried workers. Analysts fear pressure on prices and market share may force further restructuring.