optionsXpress Holdings, Inc. (NASDAQ:OXPS) today announced it has completed the acquisition of XpressTrade, LLC, for approximately $37 million.
XpressTrade, also based in Chicago, is a leading Internet-based futures and foreign exchange broker, which offers self-directed retail customers, 24-hour access to 25 exchanges and over 300 futures products worldwide, including electronic and open outcry, through its award-winning browser-based trading platform. The powerful, yet easy-to-use platform provides a wide array of sophisticated analytical tools and rich educational content, catering to both experienced and novice futures investors alike.
"We believe the acquisition of XpressTrade positions optionsXpress as the premiere derivatives-focused online brokerage," said David Kalt, Chief Executive Officer of optionsXpress. "The proliferation of electronic trading and introduction of new, retail-friendly products by the exchanges likely sets the table for significant growth in the futures industry, particularly from retail investors. XpressTrade accelerates our ability to capitalize on this opportunity."
XpressTrade was formed in 1996 by four futures veterans with over 100 years of collective industry experience, including Principal, Dan O'Neil. With an emphasis on investor education, high-touch customer service and an easy-to-use interface, XpressTrade has achieved average annual revenue growth of 70% and pretax income growth of 77% since 2003. Customer assets have almost tripled over the same period. Most recently, XpressTrade significantly upgraded its web-based platform in late 2006, improving the interface and adding new tools such as the Trade Strategizer and Technical Analyzer.
"We think optionsXpress is a perfect strategic and cultural fit. Bringing all of our products under one roof creates a powerful value proposition for the investor," commented Mr. O'Neil. "Our combination offers a best in class platform for the growing number of self-directed investors who utilize stocks, options, bonds, mutual funds and futures in their portfolios."
optionsXpress management will discuss the transaction in more detail on the upcoming fourth quarter and full year earnings conference call, scheduled for 10:00 am Central Time on January 31st.
XpressTrade's members will receive 70% of the consideration in cash and 30% in stock, representing $25.9 million in cash and the assumption of certain operating liabilities and 504,546 common shares. Three principals have agreed to multi-year employment agreements. optionsXpress expects the transaction to be accretive in 2007. Additional financial synergies are expected to be realized through operating efficiencies.
Merrill Lynch & Co. and Kirkland & Ellis LLP provided advisory services to optionsXpress and William Blair & Company and Sidley Austin LLP provided advisory services to XpressTrade.
XpressTrade 2006 Financial and Operating Metrics:
For the twelve months ended December 31, 2006, XpressTrade generated approximately $18.7 million in revenue and $7.8 million in pretax income, a 58% and 68% increase over 2005. Key operating metrics for 2006 were:
- Open accounts of 8,800
- Daily Average Revenue Trades of 2,900
- Customer Assets of $126 million