FXCM has released the slide deck for its upcoming conference call where the broker will explain the details and benefits of its proposed acquisition of rival GAIN Capital. The presentation provides a transaction overview, benefits to GAIN Capital shareholders and clients, and challenges for GAIN if it remains a standalone company.
In terms of shareholder benefits, FXCM is making the case that a merger would lead to significant operating synergies which could lead to $80-$100 million additional cash. Based on this projection they expect the deal to be accretive to earnings for 2014. They also added that the combined brokers would experience “improved balance sheet strength, Liquidity , and trading characteristics”.
As highlighted in their previous press release, FXCM is offering $5.35/share, which is a 25% premium to yesterday’s closing price of GAIN Capital. In the combined company, GAIN shareholders will assume 12.8-16.2% ownership (depending on how much cash is elected to be received by shareholders). The share portion is 0.3996 shares of FXCM stock.
In regards to GAIN shareholders, FXCM is arguing that at $5.35, the offer price is above GAIN’s 52 week high of $5.19 and 80x their 2012 net income. They added that GAIN ‘currently faces operation and financial difficulties due to its scale’ which would be enhanced through the merger. Also, the EPS accretion could lead to greater stock appreciation in the future.
For FXCM shareholders, the broker explains that stock owners will benefit from the EPS accretion and improved economies of scale due to a 36% increase in revenues and 28% gain in FX client equity. In addition, the combined FXCM and GAIN brand names could ‘enhance overall marketing presence’ (editor’s note – the marketing advantage could over the long run provide the greatest synergies, as GAIN’s ownership of the Forex.com domain provides one of the most cost effective CPC keywords – combined with FXCM’s DailyFX site, the two firms have a massive marketing reach that could be operated more efficiently, after removing overlaps)
In relation to GAIN clients, FXCM is presenting additional choices as an advantage. Clients would be able to choose either the market making or STP account and access to DailyFX trading signals. In terms of platform’s, FXCM stated that GAIN clients will have access to FXCM’s proprietary and MT4 platform. (update - in their conference call, FXCM confirmed that Forex.com clients will be migrating to FXCM's platforms)
Last, FXCM stated that as a standalone company, GAIN will face “insufficient scale in any of its three principal markets to deliver consistent results”, “pending and potential adverse regulatory changes”, “limit free cash to execute long term strategies”, and “lack of liquidity”.
Overall, this game appears to just be getting started. Based on initial reaction from industry executives, the contents of the FXCM presentation (such as GAIN’s ownership of 16.2% of the combined stock, while provide over 30% of revenues), and GAIN’s depressed stock price, the deal is viewed as hostile. In addition, rather than communicate with management, FXCM has taken the rhetoric directly to shareholders.
As such, we would expect that FXCM will probably need to sweeten its offer to convince shareholders to vote in favor of the deal. Also, they seem ready to do as much as they stated “We are highly motivated and prepared to move quickly towards a successful transaction.”
FXCM has released the slide deck for its upcoming conference call where the broker will explain the details and benefits of its proposed acquisition of rival GAIN Capital. The presentation provides a transaction overview, benefits to GAIN Capital shareholders and clients, and challenges for GAIN if it remains a standalone company.
In terms of shareholder benefits, FXCM is making the case that a merger would lead to significant operating synergies which could lead to $80-$100 million additional cash. Based on this projection they expect the deal to be accretive to earnings for 2014. They also added that the combined brokers would experience “improved balance sheet strength, Liquidity , and trading characteristics”.
As highlighted in their previous press release, FXCM is offering $5.35/share, which is a 25% premium to yesterday’s closing price of GAIN Capital. In the combined company, GAIN shareholders will assume 12.8-16.2% ownership (depending on how much cash is elected to be received by shareholders). The share portion is 0.3996 shares of FXCM stock.
In regards to GAIN shareholders, FXCM is arguing that at $5.35, the offer price is above GAIN’s 52 week high of $5.19 and 80x their 2012 net income. They added that GAIN ‘currently faces operation and financial difficulties due to its scale’ which would be enhanced through the merger. Also, the EPS accretion could lead to greater stock appreciation in the future.
For FXCM shareholders, the broker explains that stock owners will benefit from the EPS accretion and improved economies of scale due to a 36% increase in revenues and 28% gain in FX client equity. In addition, the combined FXCM and GAIN brand names could ‘enhance overall marketing presence’ (editor’s note – the marketing advantage could over the long run provide the greatest synergies, as GAIN’s ownership of the Forex.com domain provides one of the most cost effective CPC keywords – combined with FXCM’s DailyFX site, the two firms have a massive marketing reach that could be operated more efficiently, after removing overlaps)
In relation to GAIN clients, FXCM is presenting additional choices as an advantage. Clients would be able to choose either the market making or STP account and access to DailyFX trading signals. In terms of platform’s, FXCM stated that GAIN clients will have access to FXCM’s proprietary and MT4 platform. (update - in their conference call, FXCM confirmed that Forex.com clients will be migrating to FXCM's platforms)
Last, FXCM stated that as a standalone company, GAIN will face “insufficient scale in any of its three principal markets to deliver consistent results”, “pending and potential adverse regulatory changes”, “limit free cash to execute long term strategies”, and “lack of liquidity”.
Overall, this game appears to just be getting started. Based on initial reaction from industry executives, the contents of the FXCM presentation (such as GAIN’s ownership of 16.2% of the combined stock, while provide over 30% of revenues), and GAIN’s depressed stock price, the deal is viewed as hostile. In addition, rather than communicate with management, FXCM has taken the rhetoric directly to shareholders.
As such, we would expect that FXCM will probably need to sweeten its offer to convince shareholders to vote in favor of the deal. Also, they seem ready to do as much as they stated “We are highly motivated and prepared to move quickly towards a successful transaction.”
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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