Charles Schwab Corp. announced it has signed an agreement to acquire Chicago-based OptionsXpress Holdings Inc. for about $1 billion in stock.
Under the terms of the deal, OptionsXpress shareholders will receive 1.02 shares of Schwab for each share of OptionsXpress, which the deal values at $17.91 based on Schwab's closing stock price on March 18. Schwab said the deal is expected to close in the third quarter of 2011. Both companies are expected to initially retain their brand identities.
The deal marks the entry of the independent brokerage with the largest client asset base into one of the fastest segments of the securities business. U.S. options trading has increased every year since 2002, rising 7.9% to 3.9 billion contracts in 2010, according to Options Clearing Corp. data cited by Bloomberg News.
"The combination of OptionsXpress and Schwab will offer active investors an unparalleled level of service and platform capabilities. OptionsXpress' industry-leading and award-winning client tools will be well received by our existing active investor clients who are increasingly using options and other trading strategies as a key part of their total approach to investing," said Walt Bettinger, Schwab president and CEO.
OptionsXpress President and CEO, David Fischer, will continue to lead OptionsXpress as its president and a Schwab senior vice president, according to Schwab.
Schwab expects the deal to yield revenue of $80 million in the first year.
Specializing in equity options and futures trading, OptionsXpress also offers a full suite of online brokerage services for investor education, strategy evaluation and trade execution. The company had 385,200 client accounts, $8.1 billion in assets and a 12-month average of 44,800 daily average revenue trades as of February 28. Schwab's client assets totaled $1.6 trillion at that time.