ITG Offloads its Investment Research Operations to Leucadia for $12m

ITG is selling its research operations to Leucadia for $12 million, along with internal restructuring to help raise cash.

ITG (NYSE:ITG), an independent broker and financial technology provider, has entered into a definitive agreement to offload its ITG Investment Research operations to Leucadia National Corporation (NYSE:LUK) for $12 million, according to a recent ITG statement.

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ITG Investment Research is presently involved in the process of data provision across a variety of sectors, including Consumer, Telecom, Media, Technology, and Macro, servicing over 200 companies. Despite the deal, ITG will continue to deliver its energy research capabilities to institutional investors under its existing agreement.

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The $12 million deal between ITG and Leucadia is slated to close by months end and operate under the moniker of M Science. Per the sale, ITG is expecting an influx of cash that’s estimated at $5 million, though the sale is unlikely to yield any material impact on its upcoming earnings given the costs and taxes associated with the write down process.

Internal Changes

In addition to the sale, ITG has also unveiled restructuring plans that will see a reduction of personnel across its US sales operations, which will net approximately $1.6 million, in conjunction with the aforementioned sale. As such, ITG is expecting to recoup a cost savings of roughly $3 million annually given this scaling back and sale.

According to ITG’s Chief Executive Officer (CEO) and President, Frank Troise, in a recent statement on the sale: “The sale of our remaining research operations and the associated cost reduction measures we took today provide clarity to our clients, our shareholders and our employees that our strategic focus and resource allocation will be applied to our core capabilities in execution, liquidity, platforms and analytics. We thank our colleagues for their dedication and contributions to our firm.”

ITG made headlines this week after it reported its April 2016 trading volumes, which incurred an abrupt decline MoM. ITG’s total trading volumes came in at just 2.7 billion shares in April 2016, a ways off from 3.5 billion shares back in March 2016, or -22.9% MoM. The performance was largely commensurate with other institutional venues that have experienced a decline in volumes throughout Q2 2016.

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