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EXHIBIT 99.1
E*TRADE MEDIA CONTACTS
Don Scott
Neale-May & Partners
(212) 317-0900, ext. 16
dscott@nealemay.com
Ken Sporleder
Neale-May & Partners
(650) 328-5555, ext. 129
ksporled@nealemay.com
E*TRADE AND TELEBANC ANNOUNCE E*MERGER
REVOLUTIONIZING PERSONAL FINANCIAL SERVICES
Combination to Create Online Brokerage and Banking Powerhouse
PALO ALTO, CALIF. (JUNE 1, 1999) - E*TRADE(R) Group Inc. (NASDAQ: EGRP), a
global leader in online investing services, and Telebanc Financial Corporation
(NASDAQ: TBFC), the nation's largest Internet bank, today announced a
definitive agreement to merge, creating the first pure-play Internet company to
unite banking and brokerage services.
Under the terms of the agreement, Telebanc shareholders will receive
2.1 shares of E*TRADE common stock for each share of Telebanc common stock.
Based on E*TRADE's closing price on May 28, 1999, the merger is valued at
approximately $1.8 billion. Following the merger, which is expected to be
accounted for as a pooling of interests, Telebanc shareholders will own
approximately 13 percent of E*TRADE's fully diluted common stock.
This strategic e*merger is expected to revolutionize the future of
personal financial services by making available to millions of consumers a
distinctive, powerful online financial management experience which will
eliminate the need for multiple financial relationships. By creating an
Internet-based, FDIC-insured cash management account that provides exceptional
consumer value and convenience, E*TRADE further solidifies its strong core
customer
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relationship. With this central account, customers will be able to complete a
full range of transactions online (such as purchasing mutual funds, CDs and
fixed income securities, trading equities and paying bills). The combination
will strengthen one of the most cost-effective, scaleable business models in
the industry and fuel E*TRADE's proven customer acquisition engine to better
serve and aggressively expand its existing one million-plus customer account
base.
"Traditional companies are focused on re-engineering their legacy
products and high-cost distribution networks while defending their marketplace.
We continue to reinvent for the future, placing the customer front and center.
This strategic e*merger, the first to combine two e-commerce leaders, will
enable us to deliver unparalleled value to consumers as we continue to expand
and evolve an already rich set of investment, banking and cash management
tools," said Christos M. Cotsakos, chairman and chief executive officer of
E*TRADE. "We also will continue to enhance our unique business model as we
combine our all-electronic, fully scaleable platforms to achieve fast time to
market, exceptional cost efficiencies and a sustainable pricing advantage over
the competition."
E*TRADE has invested over $350 million in its patent-pending Stateless
Architecture(SM) which enables it to cost effectively support a broad range of
complex products and transactions. With Telebanc, E*TRADE acquires the
regulatory, management and operating expertise to enable both companies to
fully leverage their respective areas of expertise.
Mitchell H. Caplan, Telebanc vice chairman, chief executive officer and
president, added, "This e*merger creates the most comprehensive platform for
online brokerage and banking, leveraging the strong brand names of E*TRADE and
Telebanc, as well as our combined financial resources and leading edge
technologies. Through Telebanc, E*TRADE will be able to offer the holders of
its one million-plus customer accounts full-featured FDIC-insured Internet cash
management services and other highly-competitive FDIC-insured banking products
and services, including CD rates at the top one percent of the market and
savings rates that are double the national average."
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Telebanc already is larger than the next five pure-play Internet banks,
combined. As consumers begin to realize the power and convenience of this new
offering, E*TRADE believes it will be well positioned to further expand its
customer base and capture and even greater share of wallet.
WINNING THE CORE CONSUMER RELATIONSHIP
This e*merger gives E*TRADE another key competitive advantage in the race
to capture and develop the core financial relationship with consumers via two
strong, asset-gathering products and a powerful, comprehensive online customer
experience. The integration of E*TRADE and Telebanc offerings will meet
consumer demand for a truly integrated, best-of-breed set of personal financial
management products and services. For the first time, millions of consumers
will be able to access a full-featured, FDIC-insured Internet cash management
account, including ATM access through the national Cirrus(R) network, online
bill payment and investing services, thereby enabling them to consolidate their
brokerage and banking accounts.
"As industry leaders in online investing and branchless banking with
unrivaled focus on the customer, E*TRADE and Telebanc are well positioned to
fundamentally change the customer experience," said Cotsakos. "We will
continue to excel in providing our customers with high-quality products and
service and 'anytime, anywhere' convenience through access across multiple
personal computing and communications devices."
BUSINESS SYNERGIES
The combination will enable E*TRADE to further extend its aggressive
customer acquisition strategy into the Internet banking market while creating
greater "stickiness" through multiple asset gathering products. In addition to
exploiting its technology leadership, E*TRADE will be able to combine both
companies' marketing capabilities and resources to maximize the return on its
investments in customer relationship marketing and brand building.
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This e*merger also will further diversify and strengthen E*TRADE's revenue
base, building on the asset management company it created in February when it
launched the first of several proprietary mutual funds. E*TRADE also will
capitalize on Telebanc's capital market expertise to further enhance the
profitability of selected asset management products.
MERGER DETAILS
E*TRADE expects the transaction to be accretive to both revenue and
earnings immediately upon closing. The Boards of Directors of both companies
have approved the merger. Consummation of the merger, which is expected to be
completed this fall, is contingent on customary conditions including regulatory
and shareholder approvals.
E*TRADE is being advised by BancBoston Robertson Stephens and Telebanc is
being advised by Goldman Sachs.
ABOUT E*TRADE
A leading branded provider of online investing services, E*TRADE has
established a popular destination web site for self-directed investors. The
company offers independent investors the convenience of automated stock,
options and mutual fund order placement at low commission rates. In addition,
E*TRADE offers a suite of value-added products and services that can be
personalized, including portfolio tracking, real-time stock quotes, Smart
Alerts, market commentary and analysis, news, investor community areas and
other information services.
E*TRADE was the first securities and financial services company to be
awarded the CPA WebTrust seal of assurance by the American Institute of
Certified Public Accountants (AICPA). In consecutive quarters (4Q98, 1Q99),
the E*TRADE web site was named the No. 1 online investing site in an
international survey of the industry's top 20 Internet brokerage firms by
Lafferty Information and Resource Group, a global provider of high-value and
business information research.
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For more information on E*TRADE, visit the World Wide Web at
www.etrade.com or through many other electronic channels and online services,
including AOL (Keyword: E*TRADE), and via TELE*MASTER interactive telephone
system.
ABOUT TELEBANC
Telebanc is the holding company for Telebank, the nation's largest and
fastest growing branchless bank providing high value financial products and
services over the Internet. Telebank provides a wide range of FDIC-insured and
other banking products and services to its customers. Telebank delivers these
products and services exclusively through the Internet and other electronic
channels, thus avoiding the costs and brick-and-mortar branches. As a result,
Telebank is able to offer significantly higher rates and lower fees than
traditional banks and deliver these services worldwide through the convenient
anytime, anywhere access on the Internet. For more information on Telebanc,
visit the World Wide Web at www.telebanc.com or www.telebank.com
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IMPORTANT NOTICE
E*TRADE IS A REGISTERED TRADEMARK OF THE COMPANY. ALL OTHER
TRADEMARKS ARE PROPERTIES OF THEIR RESPECTIVE OWNERS. THE STATEMENTS CONTAINED
IN THIS NEWS RELEASE THAT ARE FORWARD-LOOKING ARE BASED ON CURRENT EXPECTATIONS
THAT ARE SUBJECT TO A NUMBER OF UNCERTAINTIES AND RISKS, AND ACTUAL RESULTS MAY
DIFFER MATERIALLY. THE UNCERTAINTIES AND RISKS INCLUDE, BUT ARE NOT LIMITED
TO, CHANGES IN MARKET ACTIVITY, MARKET ACCEPTANCE OF THE NEW E*TRADE
DESTINATION WEB SITE, ANTICIPATED INCREASES IN THE RATE OF NEW CUSTOMER
ACQUISITION, THE CONVERSION OF NEW VISITORS TO THE SITE TO CUSTOMERS,
SEASONALITY, THE DEVELOPMENT OF NEW PRODUCTS AND SERVICES, THE ENHANCEMENT OF
EXISTING PRODUCTS AND SERVICES, COMPETITIVE PRESSURES (INCLUDING PRICE
COMPETITION), SYSTEM FAILURES OR INTERRUPTIONS, ECONOMIC AND POLITICAL
CONDITIONS, CHANGES IN CONSUMER BEHAVIOR AND THE INTRODUCTION OF COMPETING
PRODUCTS HAVING TECHNOLOGICAL AND/OR OTHER ADVANTAGES. FURTHER INFORMATION
ABOUT THESE RISKS AND UNCERTAINTIES CAN BE FOUND IN THE INFORMATION INCLUDED IN
THE ANNUAL REPORT FILED BY THE COMPANY WITH THE SEC ON FORM 10-K (INCLUDING
INFORMATION UNDER THE CAPTION "RISK FACTORS") AND QUARTERLY REPORTS ON FORM
10-Q.
Information contained in this release with respect to the expected financial
impact of the proposed transaction is forward-looking. These statements
represent the company's reasonable judgment with respect to future events and
are subject to risks and uncertainties that could cause actual results to
differ materially. Such risks and uncertainties relate to, among other things,
the ability to successfully integrate the two companies, and to realize the
synergies and other perceived advantages resulting from the acquisition,
material adverse changes in economic, competitive and regulatory conditions in
the markets served by the companies, material adverse
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changes in the business and financial condition of either or both companies and
their respective customers, uncertainties concerning technological changes and
future product performance, and substantial delay in the expected closing of
the transaction.