Two hedge funds took an 8.4% stake in TD Ameritrade Holding and sent the online brokerage a letter urging it to merge with one of its competitors, according to a regulatory filing made Tuesday.
"Based on our due diligence, we believe that TD Ameritrade can dramatically increase long-term shareholder value through a combination with E*Trade Financial ("E*Trade") or Charles Schwab ("Schwab")," said the letter from SAC Capital and Jana Partners.
TD Ameritrade expressed willingness to consider such an offer. "We look at M&A every day," TD Ameritrade spokeswoman Katrina Becker told CNBC. "We believe there will be more consolidation in the industry. But it has to be the right deal and good for shareholders."
The hedge funds added that they believe representatives of Toronto-Dominion Bank on TD Ameritrade's board may be thwarting such a merger because the bank "views its significant ownership and influence on (TD Ameritrade) as being critical to its U.S. strategy."
TD Ameritrade noted in the filing that its board has formed a mergers and acquisitions committee that includes three outside independent directors.
After closing at $19.95 during regular market hours Tuesday, TD Ameritrade shares rose more than 6% in post-market trade.