Charles Schwab Corp. announced Monday that it will buy optionsXpress Holdings In.
Under the terms of the agreement, optionsXpress stockholders will receive 1.02 shares of Schwab stock for each share of optionsXpress stock. Based on Schwab’s closing stock price Friday, the transaction values each optionsXpress share at $17.91, resulting in a total transaction value of approximately $1 billion.
According to the agreement, both companies will initially retain their separate brand identities. The deal, which is expected to close during the third quarter, is subject to optionsXpress stockholder approval and regulatory approvals, along with customary closing conditions.
“The combination of optionsXpress and Schwab will offer active investors an unparalleled level of service and platform capabilities,” said Walt Bettinger, Schwab President and Chief Executive Officer. “Options investors at Schwab tend to be among the larger, more active and longer-standing of our client relationships. optionsXpress brings a similar set of sophisticated, engaged clients, many of whom we believe will find the investing, brokerage and banking services available through Schwab to be a valuable complement to those they have through optionsXpress. The expected synergies of our combination make the acquisition a win-win-win for Schwab, optionsXpress and our many important active investor clients.”
OptionsXpress, which launched in 2001 and is based in Chicago, is a retail online brokerage firm that offers equity options and futures trading. Its brokerage platform provides active investors and traders with trading tools, analytics and education. As of Feb. 28, it had 385,200 client accounts, $8.1 billion in client assets and a 12 month average of 44,800 daily average revenue trades.
“This combination of capabilities allows optionsXpress to bring our leading-edge trading and analytical technologies to one of the largest and premier brokerages in the world,” said David Fisher, optionsXpress chief executive officer. “The union of our brands marks the beginning of a new era of capabilities and services focused on the retail investor. optionsXpress and Schwab share a passion for innovation and championing the self-directed investor, and together, we will leverage our combined strengths to unlock meaningful value for customers and stockholders.”
Following the completion of the acquisition, Fisher will continue to lead optionsXpress as its president and a Schwab senior vice president.
“We launched optionsXpress in 2001 with the vision of making options and futures trading more accessible for self-directed retail investors,” said James Gray, Founder and Chairman of the Board of optionsXpress. “After ten years of successfully empowering hundreds of thousands of customers, we are excited to bring our experience with these products to a much larger audience.”
Schwab operates the nation’s largest independent brokerage in terms of client assets, which totaled $1.6 trillion as of Feb. 28. Schwab serves nearly ten million individual investor, independent registered investment advisor and corporate retirement plan participant accounts with a range of financial products and full-service investment help and advice.
Schwab estimates the acquisition will be modestly accretive over the first full year of combined operations, including expected revenue and expense synergies totaling approximately $80 million. On a pro forma basis, the combined organizations would have generated net revenues of $4.479 billion in 2010.