E-Trade Group Inc. said it agreed to buy fellow Internet brokerage Web Street Inc. for about $45 million in stock, giving it 34,000 new accounts. The deal includes Web Street’s offices in Beverly Hills, San Francisco, Boston and Denver, all of which will be converted into E-Trade centers. E-Trade expects the deal to add about $25 million to its annual revenue and to contribute to its earnings as soon as the deal closes.
The deal values Web Street at about $1.74 a share. Web Street shares surged 68 cents, or 85%, to close at $1.48 on Nasdaq. E-Trade rose $1, or 11%, to close at $10.20 on the NYSE.
E-Trade’s price includes about $25 million for Web Street’s brokerage operations and accounts, and about $20 million for the four physical locations and cash on hand.