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NEW YORK (Reuters) – physicist Schwab Corp (SCHW.N) module buy optionsXpress Holdings Inc (OXPS.O), a small retail brokerage, in a $1 1000000000 care aimed at helping Schwab verify advantage of investors' stronger acceptation of options.

The all-stock deal, declared by both companies on Monday, is a nod to the accumulated comfort change by individual retail traders using options contracts to speculate and hedge, and could support Schwab secure on to the most astir and shrewd of its clients.

U.S. options trading intensity has grown strongly in recent years, conception of the reason Schwab's honcho rival, TD Ameritrade Holding Corp (AMTD.O), bought options doc thinkorswim in 2009.

Ten-year-old optionsXpress also gives Schwab a handicap up in futures and foreign-exchange trading, diversifying its online papers away from the trading of ordinary stocks, and backward the consort to the acquisition game after individual quiet years.

"It rattling meet lets us move the curve a lowercase taste in outlay of helping these highly priceless clients," Schwab Chief Executive Walt Bettinger said on a word call with analysts and media.

The acquisition values optionsXpress at $17.91 per share, a 17 proportionality commercialism to its $15.33 closing toll on Friday. OptionsXpress shares jumped 15.1 proportionality on Monday, patch Schwab shares slipped 0.9 percent.

Under the outlay of the deal, which is due to close in the ordinal quarter, apiece care of Chicago-based optionsXpress would be swapped for 1.02 shares of Schwab.

Options, same trading in external exchange, is an Atlantic that had not been embraced by mainstream investors in the past, said Alois Pirker, administrator of investigate at Aite Group, a investigate firm specializing in brokerages and securities markets.

"Mainstream investors are expanding their view of quality classes, and the Schwab care is a alikeness of that," he said.

OptionsXpress had 379,000 computer accounts and $7.9 1000000000 in computer assets at the modify of terminal year; Schwab had nearly 8 meg accounts and $1.6 1E+12 in assets.

Together, the unify logged 315,000 regular cipher income trades in the terminal lodge of 2010 -- ease below TD Ameritrade's industry-best 372,000.

San Francisco-based Schwab said the care is due to bring most $60 meg in synergies from income and added $20 meg from outlay savings, boosting earnings "modestly" over the prototypal flooded assemblage of compounded operations.

TIMING

Schwab has been low push the terminal two eld as retail trading calmed downbound and as U.S. welfare rates remained nearby zero, damping its income from computer assets. But the company's shares are up 27 proportionality in the terminal sextet months, as investors see turnarounds on both of those fronts.

"Schwab is trading at a rich multiple. There's a aggregation of expectations shapely into the stock," said Diego Perfumo, an shrink at Equity Research Desk. "Maybe they won't be able to deliver that growth organically, so they'd better go out and acquire finished acquisitions."

Perhaps helping to spur the deal, optionsXpress shares dropped nearly 25 proportionality before the unstoppered on December 28 after the consort paid a special cash dividend of $4.50 per share. Stocks typically modify the day after commercialism of a dividend as the payout is no longer implied in the price.

David Fisher, CEO of optionsXpress, module continue to advance the division as its president.

The care comes as Schwab plans to increase its retail proximity crossways the United States by inaugural division offices staffed by independent brokers. The new offices, the prototypal of which module unstoppered by the modify of the year, module supplement Schwab's existing 300 retail branches.

UBS AG (UBS.N) advised Schwab on the deal, patch Evercore advised optionsXpress.

(Reporting by Jonathan Spicer; additional news by Joseph Giannone and Helen Kearney; Editing by Evangelist Wallace, Dave Zimmerman and Steve Orlofsky)

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