FXCM Inc (NASDAQ:FXCM) has announced that it is selling its news and research portal DailyFX to UK multi-asset brokerage IG Group Holdings plc (LON:IGG). The deal is worth $40 million and comes as a surprise for the industry, since FXCM has not so far mentioned it on its list of assets for sale, after the Laucadia National bailout which the company was forced to take in the aftermath of the SNB crisis.
Commenting on the announcement, the CEO of FXCM Inc (NASDAQ:FXCM) Drew Niv said: “While DailyFX is a high quality asset and was not a targeted asset to sell, the opportunity came along and it was something we felt we should take advantage of.”
“At this time, we do not plan on selling any other retail FX assets and believe the remaining assets held for sale satisfy the remaining debt outstanding to Leucadia,” Niv elaborated.
The CEO of IG Group Holdings plc (LON:IGG), Peter Hetherington, added: “We are extremely pleased to have had the opportunity to purchase what we consider to be the leading global client recruitment resource in the FX environment, an asset type where IG is very strong, but historically underweight.”
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“This brings to IG an exceptional proven platform for both acquiring new clients and further engaging our entire current global client base, along with a number of very talented people. This transaction further underpins our commitment to continuing to provide the best client experience in our industry,”
As part of the deal, the 34 employees that are currently on the payroll at DailyFX will transfer to IG after the acquisition is complete.
FXCM to Continue Client Onboarding from US and Canada
IG Group will be delegating the leads from US and Canada to FXCM for an annual fee. The brokerage will also continue to benefit from advertising on the US site. IG Group expects that the annual costs of operation of the newly acquired website are going to be about £5 million ($6.5 million). The purchase of DailyFX is estimated to be amortised on a straight-line basis over 10 years.
IG Group also expects that thanks to the new active clients which the website will generate for IG, the investment will become earnings enhancing in IG’s FY18 financial year and beyond.
FXCM to Use Proceeds to Repay to Leucadia National
The proceeds from the sale which FXCM receives will be used to repay its existing debt to Leucadia National. The brokerage will receive $36 million in cash and a further $4 million on completion of certain migration requirements. After the transaction is completed, FXCM will have repaid over half of its loan balance, with $157 million covered and $153 million outstanding.