Ameritrade, TD Waterhouse deal close

Ameritrade Holding Corp. is close to a deal exceeding $3 billion to buy TD Waterhouse in a move that would make it the nation's largest online brokerage, according to reports published on Sunday.

Citing executives close to the deal, the New York Times said it could be announced as early as Monday. The Wall Street Journal, citing people familiar with the talks, said word of the deal could come in the next few days.

The Times said the agreement means efforts by E*Trade Financial Corp. to acquire rival Ameritrade have apparently been thwarted.

But the Journal reported that Ameritrade has also has been discussing a potential combination with E*Trade, according to a person familiar with the negotiations. Ameritrade's board is divided about what course to take, another person familiar with the situation told the Journal.

E*Trade last month made an unsolicited bid to buy Ameritrade for more than $5.5 billion and earlier this month raised its offer, according to sources close to the situation.

E*Trade could still pursue a hostile bid for Ameritrade should the deal with TD Waterhouse not materialize, two people familiar with the matter told the Journal.

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Under terms of the transaction being discussed, Ameritrade would merge its operations with TD Waterhouse, with TD parent Toronto-Dominion Bank retaining a one-third stake in the combined business, the executives told The Times.

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Ameritrade would also issue a special dividend to its shareholders as part of the deal, the newspaper reported.

The executives said the deal would value TD Waterhouse at more than $3 billion.

Neither Ameritrade nor TD Waterhouse could immediately be reached for comment.