By Greg Hazley
E*Trade Financial is working with outside PR support as the electronic trading and banking giant faces pressure from a large hedge fund to pursue a sale of the company.
Joele Frank, Wilkinson Brimmer Katcher is advising E*Trade as Chicago-based fund Citadel pushes for board moves and a possible sale.
Citadel, which invested $1.75B in E*Trade in 2007, said in a July 20 letter to E*Trade CEO Steven Freiberg expressed “continuing and significant dissatisfaction” with the business. The fund wants a shareholder vote to hire an investment bank to review alternatives, and to remove two directors, in addition to changing rules to elect directors annually.
E*Trade acknowledged the Citadel letter July 22 saying it has already addressed the “substance” of the recommendations. The company said it has hired Morgan Stanley for a review, less than a year after hiring JP Morgan for a similar review, and it has submitted a proposal to declassify its board.
E*Trade also noted that Citadel has “significantly” reduced its investment in the company through the sale of billions of dollars of debt and equity securities at a “substantial profit” over the past 18 months.
Joele Frank partner Steve Frankel and director Averell Withers are advising E*Trade. Susan Hickey is senior VP, corporate communications, for the company.
E*Trade posted net income of $47M in Q2, up slightly over the same period of 2010. Net revenue declined to $518M from $534M a year earlier.
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