RealTime IT News

Wit SoundView Grabs E*Offering

Wit Capital Group Monday acquired investment banking firm E*OFFERING for about $328 million in stock.

E*OFFERING shareholders will receive approximately 32 million shares of Wit Capital Group, representing approximately 25 percent of Wit Capital's fully diluted shares. E*TRADE Group, General Atlantic and SOFTBANK will collectively own more than 25 million shares of Wit Capital Group , worth about $256 million.

The acquisition combines Wit SoundView's strengths in deal origination and its research model and institutional capabilities with E*OFFERING's technology platform and product capabilities.

E*TRADE's Cotsakos and Bill Ford of General Atlantic Partners will join Wit Capital Group's board of directors. The deal will close in the third quarter of this year.

Calling the purchase "aggressive," Wit SoundView Vice Chairman, President and Co-Chief Executive Officer Ronald W. Readmond, said the move will bring Wit SoundView to the next level in positioning the firm to compete successfully for lead manager roles in Internet and new technology offerings.

The news is Wit Soundview's first major deal since Wit Capital Group bought SoundView Technology Group for $320 million in stock last November.

In a related development, E*TRADE Group Inc. and Wit SoundView sealed an alliance to create a powerful new force in capital markets.

With an eye toward propelling the online investment banking and financial services revolution that they helped put into play, Wit SoundView will be the exclusive source of IPOs, follow-on offerings and other investment banking products to E*TRADE . E*TRADE will acquire Wit SoundView's retail brokerage business, representing approximately 100,000 accounts.

In addition, E*TRADE will purchase two million shares of Wit Capital Group common stock, worth about $20.5 million. E*TRADE's 2.6 million customers -- including Wit SoundView's retail customers -- will gain access to E*TRADE's products and services. These include securities research, the opportunity to apply for participation in a range of Internet and technology-related IPOs, follow-on offerings, private placements and VostockSM -- the online auction system forged last week by Wit SoundView and ITG Inc.

"With this strategic alliance, we are creating an Internet-driven category killer that offers investors an expanded world of financial opportunities that we believe will re-revolutionize the financial services space," said Christos M. Cotsakos, chairman of the board and chief executive officer of E*TRADE.