(Recasts lead; adds CEO interview, analyst; updates shares)
By Jonathan Spicer and Jonathan Stempel
NEW YORK Jan 8 (Reuters) - TD Ameritrade Holding Corp (AMTD.O) has agreed buy thinkorswim Group Inc SWIM.O in a $606 million deal that establishes the U.S. online broker in the fast-growing area of options and futures trading.
The stock and cash takeover announced Thursday would bolster Ameritrade's industry-leading trading business, and allow it to challenge Charles Schwab Corp's SCHW.O standing at the top of the industry.
Ameritrade shares fell 2.7 percent on Thursday while thinkorswim shares, which plummeted 69 percent last year, recovered nearly two thirds of that lost value.
"It was a very good time to pick up an attractive asset at an attractive price," Ameritrade Chief Executive Fred Tomczyk told Reuters.
The proposed acquisition gives shareholders of thinkorswim 0.3980 of a Ameritrade share plus $3.34 in cash for each of their shares. This values thinkorswim at $8.71 per share, a 54 percent premium over Wednesday's closing price of $5.65.
Ameritrade management said on a conference call it expects the deal to boost fiscal 2010 earnings by 3 percent to 7 percent, and by 10 percent to 15 percent after thinkorswim is fully integrated, in about two year.
The deal is expected to yield $55 million in revenues and cost savings, primarily from retiring thinkorswim's clearing contract when it retires at the end of next year. Tomczyk said in the interview there would "inevitably" be job losses, but stressed they were a minor part of overall cost savings.
The deal is expected to close within six months, pending thinkorswim shareholder approval.
Ameritrade said the transaction boosts its average client trades per day by 16 percent to about 350,000 trades, calculated from September 2007 through September 2008. Schwab recorded an average of about 270,000 trades in the same period.
It only slightly boosts Ameritrade's total client assets by $3 billion to $281 billion -- well below Schwab's $1.11 trillion in November.
"The big draw for TD Ameritrade is that it really boosts their presence in options trading, which is fast-growing and more profitable than equities trading," said Patrick O'Shaughnessy, analyst at Raymond James and Associates.
Ameritrade, based in Omaha, Nebraska, said thinkorswim leads the industry in the daily number of retail option trades per day.
Ameritrade plans to pay $225 million of cash and issue 28 million shares in the transaction, as well as initiate a roughly 28 million share stock buyback program.
It also plans to retain some of thinkorswim management, including founders Tom Sosnoff and Scott Sheridan, and said Chief Executive Lee Barba will have "an active role" in the transition.
New York-based thinkorswim offers online options and futures trading and a host of software and Web programs for traders.
"Many thinkorswim customers liked thinkorswim because of its independence and its professional grade tools," said Wade Cooperman, chief executive of online brokerage Trade Monster.
"I think there is going to be some doubt what the company is going to look like going forward from a customer perspective."
Thinkorswim changed its name from Investools last year, shortly after revealing the U.S. Securities and Exchange Commission was conducting an inquiry over certain presentations made by the company. Tomczyk said Ameritrade has been able to "get comfortable" with the ongoing SEC inquiry.
The CEO said Ameritrade, which has grown aggressively through acquisitions, is not ruling out further acquisitions in the near term.
Toronto-Dominion Bank (TD.TO), Ameritrade's largest investor, endorsed the transaction, which it said will not materially affect the Canadian bank's earnings or capital.
Shares of Ameritrade were down 36 cents, or 2.7 percent, at $13.12 on Nasdaq in noon trading, while thinkorswim shares were up $2.51, or 44 percent, at $8.16, also on Nasdaq.
While shares of thinkorswim fell 69 percent last year -- including a big drop after news of the SEC inquiry -- Ameritrade shares fell only 29 percent in 2008, a year in which the mortgage market-inspired credit crisis hammered financial stocks.
Merrill Lynch & Co is advising Ameritrade on the transaction. Paragon Capital Partners LLC is advising 25-year-old thinkorswim. (Additional reporting by Doris Frankel in Chicago; Editing by Derek Caney and Tim Dobbyn)