INTL FCStone Inc Acquires Fixed Income Dealer G.X. Clarke & Co

The target company is dealing with U.S. treasuries, federal agency and mortgage-backed securities primarily to institutional investors, the closing of

intlfcstone logoAccording to a company announcement by publicly traded broker INTL FCStone, the company has acquired fixed income dealer G.X. Clarke & Co for about $26 million plus a premium of $1.5 million, in addition, up to a further $1.5 million if certain profitability thresholds are reached after the deal.

Six of the current partners at G.X. Clarke & Co will continue to run the company after the acquisition, while co-founders Mr. Griffith X. Clarke, Mr. Daniel J. Lennon and Mr. David G. Gordon will retire.

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The company will be renamed INTL FCStone LP, and will continue to offer the same range of products and services as it currently does.

The target company was founded in 1979 and based in New Jersey, it’s registered with the SEC as an institutional dealer in fixed-income securities. The closing of the transaction is subject to conditions precedent, including regulatory approvals, and is expected to occur early in 2015.

The company is also a FINRA member, with clients ranging from asset managers and commercial bank trust and investment departments to broker-dealers and insurance companies.

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According to preliminary calculations, G.X. Clarke’s revenues for the full year are expected to reach close to $29 million, with net income before tax totaling approximately $4.5 million as of December 31st, excluding any costs associated with the transaction.

Commenting on the acquisition, INTL FCStone’s CEO, Sean O’Connor, said “G.X. Clarke & Co. brings a proven and highly regarded expertise in all aspects of the U.S. rates market – a new and exciting capability for our Company and for our existing clients. G.X. Clarke also has deep relationships with over 700 institutional accounts providing a value added approach consistent with the INTL FCStone philosophy.”

“We look forward to cementing these relationships with continued high quality service in the U.S. rates markets and by offering INTL FCStone Inc’s (NASDAQ:INTL) broader array of products and services,” he concluded.

The market cheered the announcement of the company’s shares trading higher by 3% in after-market trading, after having already gained 3% during regular market hours. INTL FCStone Inc (NASDAQ:INTL) reported its third quarter revenues at $ 118.2 million, which was lower by 8.5% when compared to the previous quarter and 4% lower than a year ago.

The company’s fixed income business is expected to pick up materially according to the immediate market reaction after the acquisition is announced.

Earlier this year, INTL FCStone (NASDAQ:INTL) was granted a regulatory approval to merge two of its subsidiaries in the UK. The entities have been consolidated to include the firm’s foreign exchange payments business alongside its full scope investment services firm providing execution and clearing related services.

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