E*TRADE Financial Corp (NASDAQ:ETFC) stock was down on Monday after it announced that it will be acquiring OptionsHouse parent company Aperture New Holdings.
E*Trade, a financial services company, said that it will pay $725 million in cash for Chicago-based online brokerage firm OptionsHouse. It plans to fund the deal with “the issuance of up to $400 million of non-cumulative perpetual preferred stock.” ETFC will pay the remaining balance with cash.
E*Trade said that it expects the acquisition of OptionsHouse to be mostly neutral to earnings in 2017. However, the financial company said that it expects it to be accretive in 2018 with run-rate synergies of approximately $65 million per year.
“From a capital utilization perspective, this transaction is incredibly attractive,” Mike Pizzi, Chief Financial Officer of E*Trade, said in a statement. “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.”
OptionsHouse has reported revenue of $104 million for the last 12 months. It has 154,000 customer accounts with $3.6 billion in customer assets. This also includes $1.4 billion in cash. It executed 27,000 Daily Average Revenue Trades for the year ended on June 30, 2016 and 63% were in options.
A conference call was held by ETFC today to discuss the acquisition of Aperture New Holdings. It’s available on the company’s website.
E*Trade is expecting the acquisition of OptionsHouse parent company Aperture New Holdings to be completed in the fourth quarter of 2016. The deal still has to go through customary closing conditions and needs approval from regulators before it can close.
ETFC shares were down 2% as of Monday afternoon.
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