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The US E-Trade Financial Corp. (NASDAQ:ETFC), owner of the multi-asset brokerage brand E-Trade, informed the Unites States Securities and Exchange Commission (SEC), it has entered into a definitive agreement to acquire Aperture New Holdings, Inc., the ultimate parent company of OptionsHouse.
The agreed sum, according to the statement, is $725 million in cash. In order to finance the transaction E-Trade intends to issue up to $400 million of non-cumulative perpetual preferred stock, with the balance paid in cash.
The intended goal of the acquisition is for E-Trade to expand its customer profile with the addition of OptionsHouse’s derivative-centric traders.
It is expected that the transaction will be completed in the fourth quarter of 2016, subject to regulatory approvals and customary closing conditions. According to its statement, E-Trade expects the transaction to be relatively neutral to earnings in 2017 and to turn profitable in 2018, when full run-rate synergies of approximately $65 million annually are expected.
“Today’s announcement is momentous,” said Paul Idzik, CEO of E-Trade Financial. Amidst a steady drumbeat of significant steps to enhance the value of E-Trade for our customers and our owners, we are pleased to make this move to deliver greatly enriched options capabilities, while capitalizing on our scale with the addition of an active customer base,” he added. According to him, this is the first acquisition E-Trade is making in a long while. “We believe options are an important component of an investor’s arsenal, and this deal will intensify our derivatives firepower,” he said.
According to Michael Curcio, CEO of Aperture Group, the sale to E-Trade will provide OptionsHouse customers with an expanded breadth of offerings, while they continue to use the same tools, platform and services they are used to. ““E-Trade has a fantastic array of products and services, grounded in a steadfast focus on the customer,” Curcio said. “Bringing OptionsHouse’s best-in-class derivatives platform within the E-Trade family will mean our customers can do more under one roof.”
OptionsHouse is an indirect subsidiary of Aperture New Holdings and is based in Chicago. Currently it has 154 000 customer accounts with $3.6 billion in customer assets, including $1.4 billion in cash. In the 12 months that ended June 30, 2016, OptionsHouse executed 27 000 Daily Average Trades (DARTs). Of them 63% were in options. Besides options, the full-suite investment products portfolio includes equities and futures.
The broker also offers a mobile trading application on all major mobile platforms and devices.
Revenues of OptionsHouse for the last twelve months were $104 million.
New York-based E-Trade Financial Corp., offers various financial services, online brokerage and banking services. It works primarily with retail clients through its 30 offices across the US. The holding company has three subsidiaries – E-Trade Securities for securities products and services, including stocks, bonds mutual funds, options, and ETFs; E-Trade Capital Management for managed account solutions; and E-Trade Bank for bank products and services.