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Datek is on the block
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February 12, 2002: 11:46 a.m. ET
Online broker has hired Morgan Stanley; sale could fetch $1B.
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NEW YORK (CNN/Money) - Datek Online Holdings Corp. is searching for a buyer and a sale could fetch as much as $1 billion, sources close to the situation told CNN/Money.
Jersey City, N.J.-based Datek has hired Morgan Stanley to search out potential offers, sources said.
Privately held Datek could be worth $600 million to $800 million. With a premium, the online broker could sell for around $1 billion, analyst Rich Repetto of Putnam Lovell Securities said.
Potential buyers include rival E*Trade Group Inc.; TD Waterhouse; Brown & Co., the online brokerage unit of J.P. Morgan Chase & Co.; and, Bank of Montreal, press reports said.
Online trading slumped after the terrorist attack in September but has since rebounded. Datek, the nation's fifth-largest online broker, competes against E*Trade (ET: down $0.16 to $9.06, Research, Estimates), Charles Schwab Corp. (SCH: down $0.20 to $14.25, Research, Estimates) and TD Waterhouse. Datek has more than 800,000 online accounts.
Datek's private investors are driving the sale, a source said. An investor group led by Bain Capital paid $700 million in December 2000 to buy a majority stake in Datek Online. At the same time Datek spun off its popular electronic trading network, Island ECN.
Datek declined to comment. Morgan Stanley could not immediately be reached for comment. 
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