INTL FCStone to Acquire GAIN Capital in All-Cash Deal

The transaction is expected to close in mid-2020.

There’s about to be another big shakeup to the brokerage industry in the United States, with INTL FCStone Inc. announcing this Thursday that it has entered into a definitive agreement to acquire GAIN Capital Holdings, Inc.

The deal, which has been approved by the Board of Directors of both companies, will see INTL FCStone buy GAIN for $6 per share in an all-cash transaction. This represents approximately $236 million in equity value. 

The transaction is expected to close in mid-2020, subject to approval by GAIN’s stockholders and regulators. The acquisition is expected to increase the transaction flows and raise INTL’s client float by around $1 billion.

Rumors of GAIN Capital acquisition surfaced in mid-2019

Rumors about GAIN Capital’s acquisition surfaced back in July of last year, as Finance Magnates reported, so today’s announcement is not a complete shock. At the time, it was expected that the US-listed brokerage might be overtaken by another large broker, such as IG Group.

Sean O’Connor, CEO of INTL FCStone
Source: INTL FCStone

Under the deal announced today, Sean O’Connor, the CEO of INTL FCStone, will take the reins of the combined firm, while GAIN CEO Glenn Stevens will continue to lead the former GAIN business within INTL FCStone.

Commenting on the acquisition, Sean O’Connor, CEO of INTL FCStone, said in the statement: “By leveraging INTL FCStone’s products and services, we can enhance GAIN’s product offering to drive market share growth by capturing additional business from existing clients, as well as enable the acquisition of new clients. 

“As a clearer, we can enhance margins on their transaction flow, and by combining the transactional flows, we believe we can increase revenue capture by internally crossing more spreads and getting better execution from markets. In addition, as a result of the elimination of GAIN’s public company costs and the consolidation of our two infrastructures, we expect to enhance our earning power.”

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Further consolidation in the US brokerage space

GAIN Capital is a US-listed brokerage that services more than 130,000 retail and institutional investors via its and City Index platforms and other channels.

Today’s announcement marks further consolidation in the United States brokerage industry. As Finance Magnates reported, there have been a number of big deals to take place in recent months, such as Morgan Stanley’s announcement that it will acquire E*Trade and last year’s $26 billion all-stock purchase of TD Ameritrade by Charles Schwab.

Following the acquisition, clients of GAIN will have access to a larger product offering and resources, whereas INTL FCStone will add a new digital platform to its global financial network, which will significantly expand its offering to retail clients, among other benefits.

Glenn Stevens, CEO of Gain Capital
Glenn Stevens, CEO of GAIN Capital
Source: Bloomberg

“GAIN’s business fits naturally within INTL FCStone’s diversified and scaled franchise, and our shareholders will benefit from this combination by receiving a substantial premium in an all-cash transaction,” added Glenn Stevens, CEO of GAIN in the statement.

“GAIN was founded over 20 years ago with the intention of providing traders with low-cost access to foreign exchange markets. By joining INTL, we see an incredible opportunity to leverage their capabilities and ecosystem of products, and to deliver an even more comprehensive offering to our customers.”

“Bringing together GAIN’s expertise in serving the retail customer and INTL’s unparalleled access to the financial markets creates an exciting value proposition and enables the combined group to serve a wider range of customers.”

Acting as the exclusive financial advisor to INTL FCStone is Jefferies LLC, which has provided $350 million of committed debt financing for the acquisition. 

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