Pru Mike Mayo has put an interesting research note out today stating there's a "1/3rd likelihood" for a Schwab-E*Trade merger over one year as idustry consolidation continues.
Pru likes thirds. The report goes on to state that Schwab (SCHW) could pay a 1/3rd premium for E*Trade (ETFC) and receive 1/3rd accretion. The report also states that such a deal would solve the succession delimma at Schwab. A merger would open the door for the 70 year old Chuck Schwab to retire and E*Trade CEO Mitch Caplan to take the reigns of the combined companies.
Says Prudential, "Net-net: we continue to recommend the stocks of both given recent favorable trends and positioning, combined with the potential added benefitof a merger involving these firms."