Charles Schwab has struck a definitive agreement to buy online brokerage optionsXpress for $1 billion in stock.
The deal will see stockholders receive 1.02 Schwab shares for each optionsXpress one. Based on Friday's closing prices, that values optionsXpress shares at $17.91 apiece.
Launched in 2001, the Chicago-based firm claims to be a pioneer of the online brokerage sector and had around 385,200 customer accounts and $8.1 billion in client assets as of 28 February. Schwab operates the largest independent brokerage in the US in terms of client assets, which totalled $1.6 trillion as of 28 February.
After the deal is closed - expected to be in the third quarter, subject to shareholder and regulatory approval - the companies will "initially retain their separate brand identities". David Fisher, CEO, optionsXpress, will continue to lead the unit.
"This combination of capabilities allows optionsXpress to bring our leading-edge trading and analytical technologies to one of the largest and premier brokerages in the world. The union of our brands marks the beginning of a new era of capabilities and services focused on the retail investor," says Fisher.
Schwab estimates the acquisition will be modestly accretive over the first full year of combined operations, including expected revenue and expense synergies totalling around $80 million. On a pro forma basis, the combined organisations would have generated net revenues of $4.479 billion in 2010.