E*TRADE Buys OptionsHouse for $725 Million Cash

E*TRADE Financial Corporation

disclosed that it reached a definitive agreement to buy Aperture New Holdings, Inc., OptionsHouse's parent company, for $725 million in cash. The company expects the transaction to boost its derivatives capabilities while expanding its customer profile due to OptionsHouse's highly active, derivative-centric traders. E*TRADE said that it plans to fund the transaction through the issue of a maximum of $400 million of non-cumulative perpetual preferred stock and the balance would be paid in cash. The company expects transaction to close in the fourth quarter of the current year, subject to customary closing conditions and regulatory approvals. Also, the company sees the transaction to be relatively neutral to its earnings next year and accretive in the follow year, i.e. 2018, when the company would gain full run-rate synergies of approximately $65 million. E*TRADE CEO, Paul Idzik, commented on the transaction, "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, "This is the first acquisition E*TRADE has made in a great while, underscoring our disciplined approach, and commitment to deliver on our growth plans. We believe options are an important component of an investor's arsenal, and this deal will intensify our derivatives firepower. Further, we could not be more excited to show OptionsHouse customers all we have to offer, including deep research and education, long-term investing tools, and a best-in-class mobile experience." OptionsHouse has 154,000 customer accounts with $3.6 billion in customer assets. This included $1.4 billion in cash. The Company claimed that it executed 27,000 Daily Average Revenue Trades for the twelve months ended June 30. Incidentally, 63 percent of them were in options. Its Revenues were $104 million for the last twelve months. The stock edged up by 0.74 percent in the pre-market trading on Monday.