TD challenged again by hedge funds

Date: Friday, June 8, 2007
Author: Darla Mercado, Investmentnews.com

 Two hedge funds have sent a second letter to TD Ameritrade, challenging the company’s refusal to merge.

JANA Partners and S.A.C. Capital Advisors, which own an 8.4% stake in TD Ameritrade, are also calling for the board of directors to create a new committee that would look at merger possibilities without being under the influence of Toronto-Dominion, which is TD’s largest stakeholder with 40% of the shares.

“It is well known that Toronto-Dominion views its TD Ameritrade stake as a key strategic asset, rather than a pure investment,” wrote JANA’s managing partner Barry Rosenstein and S.A.C. CEO Steve A. Cohen.

This conflict of interest is hurting shareholders, they said.

In its latest letter, JANA and S.A.C. continued to point out that the board was missing out on value-creation opportunities by avoiding a merger.

“If the Board truly believes that entering into a strategic combination now would not create the highest possible long-term value for TD Ameritrade shareholders, we believe it is the board’s duty to explain to shareholders why this is the case.”

Earlier this week, TD Ameritrade turned down the hedge fund’s initial May 29 suggestion for the company’s sale, saying that such a transaction “must occur at the right time and be consistent with TD Ameritrade’s business strategy,” according to JANA and S.A.C.