Investools Inc. (MM) (NASDAQ:IEDU)
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From May 2019 to May 2024
INVESTools Inc. (NASDAQ:IEDU), the market leader in
fulfilling the lifelong education needs of self-directed investors,
and thinkorswim Group Inc., a leading online brokerage platform
serving the execution needs of self-directed investors, announced
today that they have signed a definitive agreement to merge the two
companies in a transaction valued at approximately $340 million.
thinkorswim is a rapidly growing online brokerage firm that
focuses primarily on self-directed investors. Ranked #1 by Barron's
for options traders in March 2006, thinkorswim's retail trading
platform and functionality are recognized among the industry's best
for execution, professional analytics and real-time position
management. thinkorswim also has an institutional platform targeting
professionals, broker dealers and hedge funds as well as an asset
management arm servicing retail investors seeking discretionary money
management.
This transaction combines two rapidly growing, highly innovative
and free cash flow generating companies, which have complementary
businesses and customer bases. Strategic rationale behind the merger
include the following:
-- The combination of INVESTools' education capabilities with
thinkorswim's best-in-class trading platform creates a unique
business model with the ability to offer differentiated
product offerings for the retail investor;
-- INVESTools' continuing education offerings, which represent
more than 80% of its sales, are principally based on options,
complementing thinkorswim's award-winning options-oriented
execution platform;
-- The combination of two leading technology-based companies will
create operating leverage in product innovation resulting in
increased lifetime value and recurring revenue from each
student.
"INVESTools has been committed to educating investors since 1983.
With over 80% of our sales transaction volume originating from the
purchase of our continuing education products, our students have
become among the most confident, active and knowledgeable individual
investors in the market. With the majority of our continuing education
programs based on options strategies, our students have been demanding
a seamless education to the execution learning experience in both
stock and options securities," said Lee K. Barba, Chairman and CEO of
INVESTools. "This merger creates that student experience for the first
time."
"This is a strategic, transforming merger based on account
acquisition synergies generated by INVESTools' students who can now be
educated and trade on an integrated platform with top-rated
technology. When our students succeed, our shareholders benefit --
this merger represents the first time that the economics of account
acquisition for an online broker are turned on their head and account
acquisition becomes a profit center rather than a cost, in the process
originating an account whose owner knows how to use the award wining
applications and technology to their fullest to achieve better
results," added Mr. Barba.
Tom Sosnoff, thinkorswim CEO stated, "It's time to take our
customers to another level and this merger brings the resources to
thinkorswim to accomplish that. INVESTools has the passion and spirit
to empower investors through education, which has also been the
cornerstone of thinkorswim's success. The new firm will be a powerful
combination of great educational services and advanced trading
technology from which all our customers will benefit."
Financial and Operational Highlights
INVESTools expects the acquisition to be accretive during 2007,
and to extend lifetime customer value and to enhance customer
retention. Underlying the expected synergies are the following
factors:
-- The demographics of INVESTools' educated student base provide
an attractive cross-selling opportunity. INVESTools' more than
250,000 graduates, including 42,700 new graduates in the past
twelve months, are expected to more than double thinkorswim's
15,300 accounts within twelve months following closing;
-- The combination of INVESTools' educational products with
thinkorswim's powerful trading platform is expected to create
a compelling offering to attract new customers and enhance
student retention;
-- The merger will leverage INVESTools' student acquisition costs
with a leading brokerage platform that will increase and
extend lifetime value of the student.
For the 12 months ended June 30, 2006, thinkorswim generated
revenue and net income of $45.1 million and $11.2 million,
respectively, after adjusting for certain items. Key retail
performance metrics for August 2006 for thinkorswim include the
following:
-- Total funded accounts: 15,300;
-- Daily average revenue trades (DARTs): 7,500;
-- Client assets: $826 million;
-- Annual churn rate: 12%.
Transaction Terms and Structure
The Boards of Directors of both companies have unanimously
approved the merger transaction. The terms of the transaction include:
-- thinkorswim shareholders will receive 50% of merger
consideration in cash, and 50% in stock, representing
approximately $170 million in cash and 19.1 million IEDU
common shares;
-- JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Inc. will
provide INVESTools a senior secured term loan of $125 million
to fund a portion of the cash transaction and will also
provide an unfunded committed senior secured revolving credit
facility of $25 million;
-- Following the transaction, thinkorswim shareholders will have
a 30% ownership stake in INVESTools;
-- thinkorswim will receive two seats on an expanded eight-member
INVESTools' Board of Directors;
-- thinkorswim employees will be eligible to receive a $20
million retention pool that will be paid over 3 years and 2.2
million INVESTools options vesting over 4 years, of which 50%
will be at the market price at transaction closing, and 50%
will be at 150% of the market price at closing.
Approvals
The merger is subject to NASD and INVESTools shareholder approval,
and is expected to be completed by the first quarter of 2007. A
special meeting of INVESTools shareholders will be announced following
preparation and filing of proxy materials with the Securities and
Exchange Commission.
Advisors
Paragon Capital Partners, LLC initiated this transaction, and
acted as INVESTools' financial advisor in connection with the proposed
merger and with respect to the financing of this transaction. Updata
Securities, Inc. provided a fairness opinion to INVESTools with
respect to this transaction.
Conference Call Webcast Information
A conference call to discuss the acquisition is scheduled for 9:00
a.m. Eastern today. The call is being webcast by Thomson CCBN and will
be available through INVESTools' website at http://www.investools.com
under Investor Relations.
About INVESTools
INVESTools Inc. is a global leader in investor education. The
Company offers a full range of investor education products and
services that provide lifelong learning in a variety of delivery
formats, including instructor-led workshops, "at home" study programs,
personal training sessions and through the Web. More than 250,000
investors around the world have graduated from INVESTools investor
education programs. Visit the Company's corporate Web site at
http://www.investools.com for more information regarding the
INVESTools Method(TM).
About thinkorswim
thinkorswim is headquartered in Chicago, Illinois and has offices
in Bloomfield Hills, Michigan and Needham, Massachusetts. As a leading
retail option brokerage firm, thinkorswim specializes in options and
also offers customers a broad range of products including equities,
futures, mutual funds, and bonds. The company supports retail and
institutional traders through its own trading platforms and is widely
recognized as the premier option software for execution, professional
analytics and real-time position management. thinkorswim has
revolutionized the option industry by teaching and executing complex,
non-directional option strategies with single-click functionality that
has now become the industry standard. thinkorswim continues to evolve
the financial marketplace by delivering education and products that
benefit the customer whether they are hedging, speculating or
enhancing returns.
thinkorswim recently received Barron's top rating in their 2006
Annual Survey of Best Online Brokers. thinkorswim's platform surpassed
its peer group as Barron's choice for options traders and was the only
firm to ever finish #1 and #2 in software and web-based ratings.
Important Additional Information Regarding the Merger will be
filed with the SEC
In connection with the solicitation of proxies from the
shareholders of INVESTools to, among other things, approve the
issuance of INVESTools common stock in connection with the proposed
merger, INVESTools will file a proxy statement with the Securities and
Exchange Commission (the "SEC"). INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE
IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES
TO THE MERGER. Investors and security holders may obtain a free copy
of the proxy statement (when available) and other documents filed by
INVESTools at the SEC website at http://www.sec.gov. The proxy
statement and other documents also may be obtained for free from
INVESTools by directing such request to INVESTools Inc., Attention:
Investor Relations, 13947 South Minuteman Drive, Draper, Utah 84020 or
email at investor.relations@investools.com.
INVESTools and its directors, executive officers and other members
of its management and employees may be deemed participants in the
solicitation of proxies from its stockholders in connection with,
among other things, the approval of the issuance of INVESTools common
stock in connection with the proposed merger. Information concerning
the interests of INVESTools' participants in the solicitation, which
may be different than those of INVESTools stockholders generally, is
set forth in INVESTools' proxy statements and Annual Reports on Form
10-K, previously filed with the SEC, and will be set forth in the
proxy statement when it becomes available.
Forward-looking Statements
All statements in this press release that are not historical are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements may
be identified by words such as "believe," "intend," "expect," "may,"
"could," "would," "will," "should," "plan," "project," "contemplate,"
"anticipate," or similar statements. Because these statements reflect
the Company's current views concerning future events, these
forward-looking statements are subject to risks and uncertainties. The
Company has made every reasonable effort to ensure that the
information and assumptions on which these statements and projections
are based are current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in
this press release, including, without limitation, the ability to
successfully integrate acquired and potential additional operating
companies; the success of brand development efforts and strategic
alliances; demand for the Company's products and services; the ability
to compete effectively and adjust to changing market conditions;
inability to protect the Company's proprietary technology;
difficulties or delays in developing improved products when expected
or desired and with the additional features contemplated or desired;
the potential for intellectual property infringement, warranty,
product liability, and other claims; the uncertainties associated with
governmental regulation; and other factors detailed from time to time
in INVESTools' SEC filings. The forward-looking statements are made
only as of the date hereof and the Company assumes no obligation to
publicly update or revise the forward-looking statements whether as a
result of new information, future events, or otherwise.