Following media reports about the potential for a combination of TD Ameritrade (AMTD) with Charles Schwab (SCHW), Jefferies analyst Daniel Fannon said E-Trade (ETFC) "has long been the favorite as a take-out candidate," but that this hypothetical deal also has a strategic rationale and "makes sense" given the financial merits. Assuming 50% cost synergies and a majority equity transaction, he estimates a potential combination to be 12% to 16% accretive for Schwab, Fannon tells investors. The near-term prospects of a merger for E-Trade are "not as logical" if its two most likely buyers pair up, but its scarcity value would increase and the uniqueness of its platform remains a potential benefit, added Fannon. He still views E-Trade as part of the ongoing consolidation trend in the industry, but said timing of any deal is "difficult to predict."