GAIN Capital Completes GFT Acquisition – $40 million in Cash Plus Extras
GAIN Capital has confirmed that it has completed the acquisition of GFT in one of the most exciting buyouts of
After five months of anticipation, GAIN Capital has finally announced that it has completed its acquisition of GFT. The listed FX broker announced in a notification, that it had acquired the multi-asset broker for $40 million in cash, as well as shares of GAIN Capital and a five-year seller note.
In the official press release, CEO of GAIN Capital, Glenn Stevens stated, “This transaction is an important strategic step in solidifying our leadership position in the industry.”
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GAIN Capital, a leading global financial services firm has been gradually extending its global footprint through its expansion plan over the last decade. The latest acquisition highlights the firm’s commitment to develop itself as a multi-asset broker, through the acquisition, GAIN will offer traders a substantial 12,500 financial instruments to trade from.
GAIN Capital paid $40 million in cash for GFT, in addition, GFT received approximately 3.6 million shares of GAIN Capital stock and a $33 million 5-year seller note, and in return GAIN received $73 million in cash at closing.
Metrics:
GAIN published its metrics (Pro forma – assuming that the deal closed on the 1st of January, 2013) for the first 6 months of 2013, these include GFT’s details:
- Revenue of $190.0 million
GAIN Capital: $122.8 million; GFT: $67.2 million
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- Trading volume through June 30, 2013, $3.6 trillion
GAIN Capital: $2.8 trillion; GFT: $0.8 trillion
- Retail OTC: $1.3 trillion
GAIN Capital: $899.1 billion; GFT: $391.3 billion
- Institutional: $2.3 trillion
GAIN Capital: $1.9 trillion; GFT: $0.4 trillion
- Client assets as of June 30, 2013, $683.8 million
GAIN Capital: $475.6 million; GFT: $208.2 million
GAIN Capital’s share price is trading in the green, at 11.98.
“The acquisition of GFT will yield numerous benefits for our clients, partners and shareholders,” said Glenn Stevens, Chief Executive Officer of GAIN Capital. “The combined company boasts a deeper global footprint, a robust offering of more than 12,500 financial products, and industry-leading trading technology. We intend to use GFT’s broad product offering, innovative tools and educational capabilities to further strengthen our competitive position, while realizing significant synergies from combining the best of both organizations,” Stevens concluded.
GAIN Capital informed its clients about the acquisition in an email notification, stating, “As we begin the integration process, it will be ‘business as usual.’ All aspects of your relationship with GAIN remain the same. There will be no change to the way you or your customers trade, your commercial terms, the GAIN group entity which is counterparty to your trading activity, or the level of service you receive. You will have access to the same team, and we will make every effort to ensure that your everyday interactions with us go smoothly.”
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Quick math: GFT ownership gave up $73 mio in cash. Got $40 mio plus a $33 mio 5 year note. Means the cash is flat. GFT ownership got 3.6 mio shs of Gain (now at $12 per share) for a value of almost $43 mio. GFT turned over client assets of $208 mio. Seems like Gain paid a price of better than 20% of client assets. Lots of brokers out there would love to sell for a price tag that is 20% of client assets. I wonder if the 3.6 mio shares was locked in when the deal was announced.… Read more »
Quick math: GFT ownership gave up $73 mio in cash. Got $40 mio plus a $33 mio 5 year note. Means the cash is flat. GFT ownership got 3.6 mio shs of Gain (now at $12 per share) for a value of almost $43 mio. GFT turned over client assets of $208 mio. Seems like Gain paid a price of better than 20% of client assets. Lots of brokers out there would love to sell for a price tag that is 20% of client assets. I wonder if the 3.6 mio shares was locked in when the deal was announced.… Read more »
retail volumes are on the rise. the blur between retail and wholesale spreads are more readily apparent. Perhaps as more algo retail platforms are used outside mt4, the increase in volumes will be there.
retail volumes are on the rise. the blur between retail and wholesale spreads are more readily apparent. Perhaps as more algo retail platforms are used outside mt4, the increase in volumes will be there.
@Vlad The Glad: I think, Gary Tilkin, had some real negotiating power here. Not only GAIN was interested in the deal. FXCM and some others would have knocked on Gary´s door, too. But the synergies between GAIN and GFT are only too obvious. Question is whether both companies will need as much sales people as they carry now under “one roof”. I don´t think so.
By the way; the 5yr note has a nice 8,5% coupon ;=)
@Vlad The Glad: I think, Gary Tilkin, had some real negotiating power here. Not only GAIN was interested in the deal. FXCM and some others would have knocked on Gary´s door, too. But the synergies between GAIN and GFT are only too obvious. Question is whether both companies will need as much sales people as they carry now under “one roof”. I don´t think so.
By the way; the 5yr note has a nice 8,5% coupon ;=)
On the costs side -no need to have 2 offices + staff in countries across the world. (Duplication) 1 will do.
On the costs side -no need to have 2 offices + staff in countries across the world. (Duplication) 1 will do.
@AS…..did not know about the 8.5% coupon. Gain does not have great operating metrics, but they are probably not much of a credit risk. Good for GFT ownership. And as much as others may have been knocking on the door of GFT, the loudest knock was coming from the NFA which had just forced what was effectively a shut-down of GFT over a weekend. So I do not thing GFT ownership had too much negotiating leverage. The GFT offices on the 34th floor in Canary Wharf are slowly emptying out presently. We are close enough to the end of 2013… Read more »
@AS…..did not know about the 8.5% coupon. Gain does not have great operating metrics, but they are probably not much of a credit risk. Good for GFT ownership. And as much as others may have been knocking on the door of GFT, the loudest knock was coming from the NFA which had just forced what was effectively a shut-down of GFT over a weekend. So I do not thing GFT ownership had too much negotiating leverage. The GFT offices on the 34th floor in Canary Wharf are slowly emptying out presently. We are close enough to the end of 2013… Read more »
“Question is whether both companies will need as much sales people as they carry now under “one roof”. I don´t think ”
GFT started laying off brokers over a year ago
“Question is whether both companies will need as much sales people as they carry now under “one roof”. I don´t think ”
GFT started laying off brokers over a year ago
in the best case scenario 🙂
in the best case scenario 🙂