Online Broker E-Trade Undertakes Buying Spree; Buys HarrisDirect for $700M, Kobren Insight in Second Deal
August 15, 2005
Discount broker E-Trade Financial announced Tuesday it would acquire Massachusetts-based asset manager Kobren Insight Management for an undisclosed amount.
The deal, which came just 24 hours after the online giant scooped up rival HarrisDirect for $700 million in cash, advances E-Trade's wealth management business and transforms the company into a full-service financial services firm. E-Trade officials said they expect the deal to contribute close to $10 million in revenues and $2.3 million in net income in 2006.
A registered investment advisor, Kobren Insight manages about $1 billion in assets and serves as the investment advisor to the Kobren Insight Funds from the Kobren Insight Group. It is run by Eric Kobren, a former Fidelity Investments group marketing director popularly known within the industry for publishing Fidelity Insight, a monthly newsletter devoted to the Boston fund giant.
Kobren and his group's managing director, Rusty Vannerman, as well as six Kobren analysts, will join E-Trade. Other Kobren employees will remain with the company's various newsletters.
"E-Trade Financial seeks to enhance its advice and wealth management services by creating high-value tools and services targeted to each of our retail customer segments," said R. Jarrett Lilien, president and COO, E-Trade, in a statement.
"The [Kobren] acquisition will bring customer relationships that can be monetized through our cash, investment and credit solutions." Lilien said.
E-Trade has been at the leading edge of a flurry of consolidation in the brokerage industry, which has been suffering from fewer customer transactions since the dot-com bubble burst in 2000. In January, E-Trade acquired Howard Capital Management and this spring made an unsuccessful bid to buy Ameritrade, which answered the call by acquiring TD Waterhouse.
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