INTL FCStone Acquires GAIN Capital Holdings, Inc.
One would think the largest provider of retail FX in the United States would forever stay on top. INTL FCStone proved us all wrong when it announced its GAIN Capital acquisition earlier today.
Gain Capital Holdings, Inc. disappointed Wall Street with low net revenues for both Q4 and the full 2019 fiscal year. Net revenues went down -33 percent quarter-over-quarter alongside a -35 percent drop year-over-year.
The figures came in at $53.3 million from $79.9 million and $234 million from $358 million, respectively.
An unusually low volatility environment hit the company’s income last year, explained the company’s CEO. Lower activity across markets also led to decreased numbers.
The quarterly timetables also saw a net loss swollen to $31.2 million vs. $0.7 million against the year prior. The full year yielded a net loss of $60.8 million compared to a net income of $28 million achieved in 2018.
Still, GAIN Capital’s stock went up by over 66 percent. This was from news circulating about INTL’s proposed acquisition earlier this morning.
About INTL’s GAIN Capital Acquisition
Approved by the Board of Directors of both countries, INTL FCStone will buy GAIN for $6.00 per share. The all-cash transaction represents about $236 million in equity value.
The companies expect to close the deal mid-2020 for approval from GAIN’s stockholders and regulators. This could increase transaction flows and raise the acquisitor’s clientele to flat around $1 billion.
INTL FCStone CEO Sean O’Connor will lead the combined firms. In the meantime, GAIN CEO Glenn Stevens will continue to lead his business before the merge.
Commenting on the acquisition, O’Connor claims his company can enhance GAIN’s product offering to drive market share growth. He plans to capture additional businesses from existing clients and to enable more acquisitions in the future.
By enhancing margins on GAIN’s transaction flow and combining transactional flows, O’Connor seeks to increase revenue capture. This crosses more spreads and achieves better execution from the markets.
