E*TRADE Financial Corp (NASDAQ:ETFC), a financial service provider for retail investors, announced on Monday that it agreed to acquire Aperture New Holdings, Inc., which is the corporate parent of OptionsHouse for $725 million. The all-cash deal is expected to close in the fourth quarter of 2016, according to the statement.
“This transaction provides OptionsHouse customers with an expanded breadth of offerings, while they continue to enjoy the same tools, platform, value, and quality services they have come to expect,” Michael Curcio, the CEO of Aperture Group, LLC, said in the statement on Monday. The CEO of E*Trade Financial also said that the transaction will strengthen the derivatives capabilities and enrich the client profile of E*Trade by adding OptionsHouse’s active traders.
According to the statement, E*Trade Financial will issue up to $400 million of non-cumulative preferred stocks to finance the deal, and the company anticipated that the transaction would have little effect to earnings in 2017 but would add earnings in 2018. In the deal, Credit Suisse and Skadden, Arps, Slate, Meagher & Flom worked as advisors of E*Trade; Evercore and Paul, Weiss, Rifkind, Wharton & Garrison and Jefferies advised OptionsHouse.
Headquarterd in Chicago, OptionsHouse now has customer accounts of 154,000 and customer assets of $3.6 billion, $1.4 billion of which is in cash. The company’s revenue for the past year was $104 million and the Daily Average Revenue Trades for the past 12 months ended on June 30, 2016 was 27,000.
“From a capital utilization perspective, this transaction is incredibly attractive,” Mike Pizzi, CFO of E*Trade Financial, said in the statement. “Beyond creating compelling long-term returns through expansion and synergies, the introduction of preferred equity optimizes our capital structure and enhances flexibility. Importantly, it supports our consolidated Tier 1 leverage ratio to remain above target, while creating flexibility to continue marching forward on other capital actions, including share repurchases and balance sheet growth.”