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Dowry for Datek Building Up

Potential suitors are upping the ante for privately held online brokerage Datek Online Holdings Inc., and the dowry may reach into the $1 billion-plus range.

Companies said to be interested in Datek include E*Trade Group Inc. , Ameritrade Holding Corp. and Toronto-Dominion Bank, which owns the Internet-based discount brokerage TD Waterhouse.

Reuters quoted unnamed sources as saying that Jersey City, N.J.-based Datek is drawing offers in the $1.2 billion to $1.6 billion range, and that Bank of America apparently has dropped out of the running. Wells Fargo's interest was unclear.

Datek is owned by a group of private equity firms led by Boston-based Bain Capital, which acquired a majority stake in December 2000 in a deal valued at about $700 million.

No matter how many bids are submitted, a final decision on a buyer is likely to be at least a week away, sources said.

The online brokerage business has suffered during the recession, and analysts have said Datek, ranking as the No. 5 pure-play online trading company with about 841,000 accounts, was not expected to be quite so pricey.

Bidding has also been driven up by the fact that Datek has about $300 million worth of cash on its books, sources told Reuters. Still, a price tag of between $1.2 billion and $1.6 billion would value Datek at between $1,400 and $1,900 per account, far higher than the $1,200 to $1,400 range analysts expected.