Hedge funds praise TD Ameritrade move

Date: Tuesday, July 3, 2007
Author: Kevin Shin, Investmentnews.com

Two hedge funds today endorsed TD Ameritrade Holding Corp's decision to establish an independent mergers and acquisitions committee.

In a letter dated Tuesday, the two funds, JANA Partners LLC and S.A.C. Capital Advisors LLC, also called on Ameritrade's board to invest the new committee with exclusive power to pursue and lead discussions with potential buyers.

"While we have full confident in the abilities and integrities of these directors to pursue the right path for stockholders, this announcement is only meaningful if these directors are free to conduct this strategic process unimpeded," the letter, signed by S.A.C. chief executive Steven Cohen and JANA head Barry Rosenstein, said.

The funds, which together own an 8.6% stake in Omaha, Neb.-based Ameritrade, have been pushing for the sale of the online broker to one of its competitors.

Their efforts were hampered by executives of Toronto-Dominion Bank, which owns a 40% stake in Ameritrade. Toronto-Dominion has been accused by the funds of trying to block a sale because it would threaten to diminish the Canadian bank's position in the U.S.

As such, Stamford, Conn.-based S.A.C. and San Francisco, Calif.-based JANA jointly argued that the three Toronto-Dominion representatives that were members of the five-member mergers and acquisitions committee had a conflict of interest. Although Toronto-Dominion denied anything of the sort, Ameritrade's move yesterday barred two of the three members from joining the new committee.