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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 12, 2000
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E*TRADE Group, Inc.
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(Exact name of registrant as specified in charter)
Delaware 1-11921 94-2844166
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4500 Bohannon Drive, Menlo Park, California 94025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 331-6000
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 2 ACQUISITION OR DISPOSITION OF ASSETS
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On January 12, 2000, E*TRADE Group, Inc. ("E*TRADE") closed its merger
with Telebanc Financial Corporation, a Delaware corporation ("Telebanc"),
pursuant to which Turbo Acquisition Corp., a wholly owned subsidiary of E*TRADE,
was merged with and into Telebanc, with Telebanc continuing as the surviving
entity and as a wholly owned subsidiary of E*TRADE. The securityholders of
Telebanc received 1.05 shares of E*TRADE common stock for each share of Telebanc
common stock and will own approximately 12 percent of E*TRADE's fully diluted
common stock as a result of the merger. The amount of such consideration was
determined based upon arm's-length negotiations between E*TRADE and Telebanc.
The purpose of the acquisition is to extend E*TRADE's reach as a leading
electronic personal financial services company.
On January 13, 2000, the Registrant issued a press release announcing
the final closing of its merger with Telebanc, a copy of which is filed herewith
as Exhibit 99.1.
Item 5 OTHER EVENTS
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On January 25, 2000, E*TRADE announced its intention to raise
approximately $500 million, subject to market and other conditions, through a
Rule 144A offering of convertible notes due 2007.
A copy of the press release containing the announcement is filed
herewith as Exhibit 99.2.
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statements of Business Acquired.
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For the financial statements required by part (a) of Item 7 relating
to the acquired business referred to in Item 2 above, the Registrant
incorporates by reference the consolidated financial statements of Telebanc
Financial Corporation ("Telebanc") for the years ended December 31, 1998, 1997
and 1996 included in Telebanc's Annual Report on Form 10-K for the year ended
December 31, 1998, and the interim consolidated financial statements for the
nine months ended September 30, 1999 and 1998 included in Telebanc's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1999.
(b) Pro Forma Financial Information.
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The pro forma combined financial statements of the Registrant, as of
September 30, 1999 and for the years ended September 30, 1999, 1998 and 1997,
are incorporated by reference from the Registrant's Registration Statement on
Form S-4, filed on November 22, 1999.
(c) Exhibits. The following documents are filed as exhibits to this
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report:
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2.1* Agreement and Plan of Merger and Reorganization dated as
of May 31, 1999 by and among E*TRADE Group, Inc., Turbo
Acquisition Corp. and Telebanc Financial Corporation.
23.1 Consent of Arthur Andersen LLP.
99.1 Press Release, dated January 13, 2000, issued by E*TRADE
Group, Inc., announcing the closing of its merger with
Telebanc Financial Corporation.
99.2 Press Release, dated January 25, 2000, issued by E*TRADE
Group, Inc. announcing its intention to sell $500 million in
convertible subordinated notes.
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* Incorporated by reference to an exhibit filed with the
Registrant's Current Report on Form 8-K, filed June 10,
1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
E*TRADE Group, Inc.
(Registrant)
Date: January 27, 2000 By: /s/ Leonard C. Purkis
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Leonard C. Purkis
Chief Financial Officer
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EXHIBITS INDEX
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Exhibit Description
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2.1* Agreement and Plan of Merger and Reorganization dated as
of May 31, 1999 by and among E*TRADE Group, Inc., Turbo
Acquisition Corp. and Telebanc Financial Corporation.
23.1 Consent of Arthur Andersen LLP.
99.1 Press Release, dated January 13, 2000, issued by E*TRADE
Group, Inc., announcing the closing of its merger with
Telebanc Financial Corporation.
99.2 Press Release, dated January 25, 2000, issued by E*TRADE
Group, Inc. announcing its intention to sell $500 million in
convertible subordinated notes.
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* Incorporated by reference to an exhibit filed with the
Registrant's Current Report on Form 8-K, filed June 10,
1999.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in the Registration Statements of E*TRADE Group, Inc. on Form S-3
(Nos. 333-94457, 333-90963, 333-91527, 333-90557, 333-89809 and 333-86925) and
on Form S-8 (No. 333-72149) of our report dated February 10, 1999 included in
Telebanc Financial Corporation's Form 10-K for the year ended December 31,
1998.
ARTHUR ANDERSEN LLP
Vienna, Virginia
January 27, 2000
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EXHIBIT 99.1
Thursday January 13, 3:01 a.m. Eastern Time
Company Press Release
SOURCE: E*TRADE Group, Inc.
E*TRADE and Telebanc Close Merger
Leading Online Brokerage and Largest Internet Bank Join to Create Blue-Chip
Online Financial Services Company for the 21st Century
MENLO PARK, Calif. and ARLINGTON, Va., Jan. 13/PRNewswire/ --E*TRADE Group, Inc.
(Nasdaq: EGRP - news), a global leader in online investing services, and
Telebanc Financial Corporation (Nasdaq: TBFC - news), the parent company of
Telebank, the nation's largest pure-play Internet bank, today announced the
final closing of their merger, creating one of the world's leading electronic
personal financial services companies and a blue-chip e-commerce brand for the
21st century.
Demonstrating their solidarity and strong forward momentum, the two companies
acted swiftly to finalize the merger just one day after receiving final
regulatory approval from the Office of Thrift Supervision (OTS) on Tuesday,
January 11, 2000.
"The greatest beneficiaries of this merger will be our customers," said Christos
M. Cotsakos, chairman of the board and chief executive officer of E*TRADE Group,
Inc.
"E*TRADE's vision has always been about democratizing financial services, and
we've reinvented the global financial services industry by putting power and
choice back into the hands of individual investors. Leveraging the combined
strengths of the two organizations, we are now building one of the Web's most
powerful and indispensable financial destinations, offering consumers everything
they need to achieve their financial goals, from personalized brokerage, banking
and asset management services, to actionable content, community and commerce.
This merger will help to maximize value for our shareowners, associates and
partners through long term strategic benefits, such as expanded marketing
opportunities and revenue diversification."
"The combined E*TRADE/Telebank team has already made progress in moving forward
to create an online financial powerhouse worldwide," said Mitchell H. Caplan,
president and chief executive officer of Telebanc. "Both companies have skilled
management teams with proven track records of executing against aggressive
growth strategies, and together we plan to capture a growing share of the
global financial services business through an expanding selection of integrated
online financial products and services."
Under the terms of the merger agreement, first announced in 1999, Telebanc
shareholders receive
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Page 2 of 2
1.05 shares of E*TRADE common stock for each share of Telebanc common stock.
Following the merger, which is being accounted for as a pooling of interests,
Telebanc shareholders will own approximately 13 percent of E*TRADE's fully
diluted common stock.
About E*TRADE
E*TRADE, a global leader in online personal financial services, is the world's
most-visited online investing site according to Media Metrix (9/99), offering
value-added investing and research features, premium customer service and a
redundant, proprietary Stateless Architecture (SM) infrastructure. In addition
to the US, E*TRADE presently serves customers through branded web sites in
Japan, the U.K. Sweden, France, Australia, New Zealand, and Canada. E*TRADE has
been ranked the number one online brokerage by Lafferty Information and Research
Group, PC Magazine and Smart Computing magazine. E*TRADE Securities Inc.
(Member NASD/SIPC), and its parent company, E*TRADE Group, Inc. have offices in
Northern California and in other major business centers in the US and worldwide.
About Telebanc
Telebanc Financial Corporation is the holding company for Telebank, the nation's
largest and fastest growing pure-play Internet bank providing a wide range of
high value FDIC-insured banking products and other financial services. Telebank
delivers these products and services exclusively through the Internet and other
electronic delivery channels, to avoid the costs of brick-and-mortar branches
and to pass the savings back to customers at significantly higher rates and
lower fees than traditional banks with convenient anytime, anywhere access
worldwide. Telebanc has been ranked number-one by bankrate.com in their 1999
nationwide annual checking survey and has been selected one of the top fifty
fastest growing Internet companies by Worth magazine. At September 30, 1999,
Telebanc had nearly $4.0 billion in assets, more than $2.0 billion in deposits
and 100,000 customer accounts. For more information on Telebanc, visit the
World Wide Web at www.telebanc.com or www.telebank.com
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 Destination E*TRADE 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, 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.
. E*TRADE Media Contact
. Heather Fondo
. E*TRADE Group, Inc.
. 650-331-5978
. [email protected]
. Telebanc Media Contact
. Anita Sen
. Golin/Harris International
. 213-623-4200
. [email protected]
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE
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E*TRADE Media Contacts: Investor Contacts:
Heather Fondo Len Purkis
(650) 331-5248 (650) 331-6076
[email protected] [email protected]
Bronwyn Wormell Susan Wolfrom
(650) 331-5978 (650) 331-5303
[email protected] [email protected]
E*TRADE GROUP, INC. TO SELL $500 MILLION IN CONVERTIBLE
SUBORDINATED NOTES
MENLO PARK, Calif., January 25, 2000 - E*TRADE Group, Inc. (Nasdaq: EGRP) today
announced its intention to raise approximately $500 million, subject to market
and other conditions, through a Rule 144A offering of convertible subordinated
notes. The notes will be convertible, at the option of the holder, into shares
of E*TRADE's common stock and will be non-callable for three years.
E*TRADE expects to use approximately $150,000,000 of the net proceeds to
refinance outstanding senior secured indebtedness and the remaining net proceeds
for general corporate purposes, including financing the future growth of the
business.
This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities.
The notes will not be registered under the Securities Act of 1933 and may
not be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements under such act.
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