E*Trade Financial (ETFC) said it would buy the parent of online brokerage OptionsHouse for $725 million in cash, as the company looks to better compete in derivatives trading.
OptionsHouse executed 27,000 daily average revenue trades for the twelve months ended June 30, of which 63 percent were in options, E*Trade said on Monday.
Chicago-based OptionsHouse currently operates 154,000 customer accounts and has $3.6 billion in customer assets, including $1.4 billion in cash.
E*Trade, which operates a discount broker-dealer and a bank, said it intends to help finance the deal by issuing up to $400 million of preferred stock.
The company said it expected the deal, which is likely to close in the fourth quarter, to add to earnings in 2018.
OptionsHouse is an indirect subsidiary of Aperture New Holdings, a General Atlantic company.
Credit Suisse and Skadden, Arps, Slate, Meagher & Flom advised E*Trade. Evercore and Paul, Weiss, Rifkind, Wharton & Garrison and Jefferies are Aperture’s advisers.