OMAHA -- TD Ameritrade Holding Corp.'s board of directors voted yesterday to exclude representatives of both their largest shareholders from preliminary merger discussions, following pressure to do so from two hedge funds.
The board's mergers-and-acquisitions committee was made up of five members: three outside independent directors; Wilbur Prezzano, a representative of the company's largest shareholder, Toronto-Dominion Bank; and Robert Slezak, a representative of the Ricketts family, which owns about 21 per cent of the company.
Mr. Prezzano and Mr. Slezak are not on the newly reorganized board.
The hedge funds, Jana Partners and SAC Capital Advisors, said TD would oppose a buyout because it might diminish the bank's stake in Ameritrade. The funds also contend the Toronto-based bank, which owns about 40 per cent of Ameritrade, stands to lose strategic benefits.
Ameritrade spokeswoman Katrina Becker said the move to reorganize the company's mergers-and-acquisitions board with three members was "a straightforward, transparent action, so that if there happened to be any perception of influence, that that was eliminated."
The hedge funds say TD chief executive officer and Ameritrade board member Ed Clark has held Ameritrade takeover talks, and that Mr. Clark set conditions to ensure board representation and a certain level of stock ownership for the bank. The hedge funds say those conditions impeded talks and prevented any deal from going to the full board. TD officials have denied any conflict of interest.
The hedge funds - which claim a combined ownership of 8.4 per cent of Ameritrade shares - have been pressuring Ameritrade to join with another major brokerage.
The funds have said they would like Ameritrade to pursue a deal with a major competitor such as E*Trade Financial Corp. or Charles Schwab Corp.
Messages left for hedge fund officials were not immediately returned.
Close: $20.15 (U.S.), up 15 cents
© 2007 The Globe and Mail. All rights reserved.
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.