INTL FCStone Inc. (NASDAQ: INTL) (“INTL FCStone”) today announced
that it has entered into a definitive agreement to acquire GAIN
Capital Holdings, Inc. (NYSE: GCAP) (“GAIN”), which has been
approved by the Board of Directors of both INTL FCStone and GAIN.
INTL FCStone has agreed to acquire GAIN for $6.00 per share in an
all-cash transaction representing approximately $236 million in
equity value. As part of the transaction, INTL intends to make an
offer at closing to repurchase GAIN’s $92 million convertible notes
due 2022. GAIN’s $60 million convertible notes due 2020 will be
repaid from GAIN’s cash on hand prior to closing.
GAIN serves more than 130,000 retail and institutional investors
through its FOREX.com and City Index platforms, among other
channels. As a result of the combination, GAIN’s customers
will benefit from a richer product offering, and the expanded
resources and greater scale of the combined firm. By
acquiring GAIN, INTL FCStone, in turn, will add a new digital
platform to its global financial network, significantly expanding
its offering to retail clients, as well as a complementary futures
business. The acquisition is expected to increase INTL’s
transaction flows and raise client float by ~$1 billion. The
acquisition of GAIN’s digital assets and expertise will also
accelerate the digitization of INTL FCStone’s platform.
Sean O’Connor, CEO of INTL FCStone, commented on the
transaction, “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.”
Glenn Stevens, CEO of GAIN commented on the transaction, “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. 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.”
Mr. O’Connor concluded, “This transaction is priced at a 12%
premium to GAIN’s tangible book value and we anticipate will be
immediately accretive to return on equity and earnings. We expect
the cost and capital synergies of this merger will enable us to
realize positive returns from the transaction even amid today’s
multi-decade lows in volatility, and position us for significant
upside as FX market conditions normalize. In the meantime, we
believe the increase in diversity of our portfolio in terms of
product and customer segments will reduce the overall volatility of
our revenues.”
Sean O’Connor will continue to lead the combined firm, while
GAIN CEO Glenn Stevens will continue to lead the former GAIN
business within INTL FCStone.
The transaction is expected to close in mid-2020, subject to
approval by GAIN’s stockholders, regulatory approvals and customary
closing conditions. VantagePoint Capital Partners, Michael
Spencer’s private investment group IPGL, and Glenn Stevens,
representing 44% of GAIN’s outstanding voting power in aggregate,
have entered into agreements to vote in favor of the
transaction.
Jefferies LLC is acting as exclusive financial advisor to INTL
FCStone and has provided $350 million of committed debt financing
for the acquisition. DLA Piper is serving as INTL’s legal
counsel, GCA Advisors LLC is acting as financial advisor to
GAIN and Davis Polk & Wardwell LLP is serving as its legal
counsel.
Webcast and Conference Call Information
The company will host a conference call to discuss the
transaction today at 11:00 am ET. A live web cast of the conference
call as well as additional information to review during the call
will be made available in PDF form at http://www.intlfcstone.com.
Additionally, the Company will file the additional information
reviewed on the call as an exhibit to its Report on Form 8-K.
Participants can also access the call by dialing 1-844-466-4112
(within the United States and Canada), or 1-408-337-0136
(international callers) approximately ten minutes prior to the
start time.
A replay of the call will be available at
http://www.intlfcstone.com approximately two hours after the
call has ended and will be available through March 5, 2020. To
access the replay, dial 1-855-859-2056 (within the United States
and Canada), or 1-404-537-3406 (international callers) and enter
the replay passcode 6391358.
About INTL FCStone Inc.
INTL FCStone Inc. (NASDAQ: INTL) connects its clients with the
global markets across asset classes - providing execution,
post-trade settlement, clearing and custody. Clients use its
digital platforms, market intelligence and high-touch service to
manage their market risk, pursue trading opportunities, make
investments efficiently, and improve their business
performance.
Further information on INTL FCStone is available at
www.intlfcstone.com.
About GAIN Capital Holdings, Inc.
GAIN Capital Holdings, Inc. provides innovative trading
technology and execution services to retail and institutional
investors worldwide, with multiple access points to OTC markets and
global exchanges across a wide range of asset classes, including
foreign exchange, commodities, and global equities. GAIN Capital is
headquartered in Bedminster, New Jersey, with a global presence
across North America, Europe and the Asia Pacific regions.
For further company information, visit www.gaincapital.com.
Media Contact:
Jay A. Morakis
M Group Strategic Communications (for INTL FCStone Inc.)
1-646-859-5951
jmorakis@mgroupsc.com
Forward Looking Statements
This press release contains “forward-looking statements” within
the meaning of “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are identified by words such as “may,”
“should,” “expects,” “anticipates,” “assumes,” “can,” “will,”
“could,” “likely,” “intends,” “might,” “predicts,” “seeks,”
“would,” “believes,” “estimates” or “plans.” These
forward-looking statements include, among other things, statements
relating to the expected results of the merger with GAIN, including
any anticipated cost or capital synergies associated therewith,
operating efficiencies and results, growth, client and stockholder
benefits, accretion, financial benefits or returns, key
assumptions, the expected timing of the closing of the merger,
integration costs and transaction costs, expected timing and use of
proceeds of any financing, our future financial performance, our
business prospects and strategy, anticipated financial position,
liquidity and capital needs and other similar matters. These
forward-looking statements are based on management’s current
expectations and assumptions about future events, which are
inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. These forward-looking
statements involve known and unknown risks and uncertainties, many
of which are beyond our control, that may cause actual results to
be materially different from any anticipated results expressed or
implied by these forward-looking statements, including, among
others, (i) the occurrence of any event, change, or other
circumstance that could give rise to the termination of the merger
agreement, (ii) the transaction closing conditions may not be
satisfied in a timely manner or at all, including due to the
failure to obtain GAIN stockholder approval and regulatory
approvals, (iii) the announcement and pendency of the merger may
disrupt our or GAIN’s business operations, (iv) anticipated
benefits of the merger, including the realization of revenue,
accretion, financial benefits or returns and other cost and capital
synergies may not be fully realized or may take longer to realize
than expected, (v) adverse changes in economic, political and
market conditions, such as price levels and volatility in the
commodities, securities and foreign exchange markets in which we
and GAIN operate, (vi) losses from our market-making and trading
activities arising from counter-party failures and changes in
market conditions, (vii) the possible loss of key personnel or GAIN
key personnel, (viii) the impact of increasing competition, (ix)
the impact of changes in government regulation, (x) the possibility
of liabilities arising from violations of federal and state
securities laws, (xi) the impact of changes in technology in the
securities and commodities trading industries and (xii) other risks
and uncertainties. You should read cautionary statements made as
being applicable to all related forward-looking statements wherever
they appear in this press release. We cannot assure you that the
forward-looking statements in this press release will prove to be
accurate. Furthermore, if our forward-looking statements prove to
be inaccurate, the inaccuracy may be material. In light of the
significant uncertainties in these forward‑looking statements, you
should not regard these statements as a representation or warranty
by us or any other person that we will achieve our objectives and
plans in any specified time frame, if at all. Investors are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date they were made.
Except as expressly required under federal securities laws
and the rules and regulations of the U.S. Securities and Exchange
Commission (the “SEC”), we do not have any obligation, and do not
undertake, to update any forward-looking statements to reflect
events or circumstances arising after the date of this press
release, whether as a result of new information, future events or
otherwise. All forward-looking statements attributable to us
are expressly qualified by these cautionary statements.
Additional Information and Where to Find It
This press release may be deemed solicitation material in
respect of the proposed acquisition of GAIN by INTL FCStone. In
connection with the proposed merger, GAIN will file with the SEC
and furnish to GAIN’s stockholders a proxy statement and other
relevant documents. This press release does not constitute a
solicitation of any vote or approval. Stockholders of GAIN are
urged to read the proxy statement when it becomes available and any
other documents to be filed with the SEC in connection with the
proposed merger or incorporated by reference in the proxy statement
because they will contain important information about the proposed
merger.
Investors will be able to obtain free of charge the proxy
statement and other documents filed with the SEC at the SEC’s
website at http://www.sec.gov. In addition, the proxy statement
will be available free of charge through GAIN’s website at
www.ir.gaincapital.com as soon as reasonably practicable after it
is electronically filed with the SEC.
The directors, executive officers and certain other members of
management and employees of each of GAIN and INTL FCStone may be
deemed “participants” in the solicitation of proxies from
stockholders of GAIN in favor of the proposed merger. Information
regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of the stockholders of
GAIN in connection with the proposed merger will be set forth in
the proxy statement and the other relevant documents to be filed
with the SEC. You can find information about GAIN’s executive
officers and directors in the definitive proxy statement on
Schedule 14A in connection with GAIN’s 2019 Annual Meeting of
Shareholders, filed with the SEC on April 30, 2019.
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