Financial analysts and investors were both shocked to learn that INTL FCStone INC has purchased GAIN Capital Holdings. This marks one of the most unexpected and costly takeovers in the United States digital finance space. The announcement that this deal has been completed was made on Thursday, February 27, 2020. It comes after the Board of Directors from both companies agreed to the acquisition contract. INTL FCStone Inc will pay $236 million to take over this digital exchange, which breaks down to $6.00 per share. Before the transaction can be processed, GAIN Capital stockholders and American regulators must approve the takeover contract before Mid-2020.
It should be noted that there have been rumours regarding the acquisition of GAIN Capital since July 2019. It’s not shocking that they’ve completed a deal but more surprising as the prolonged delays that followed with potential acquisition partners. It was expected that the IG Group would purchase GAIN Capital, with INTL FCStone Inc never once being mentioned in the rumour mill. It should be noted that the Gain Capital CEO and INTL FCStone Inc CEO will now operate this digital exchange as partnered leaders.
The chief executive officer of INTL FCStone Inc, Sean O’Connor, spoke to reporters regarding this acquisition contract. He stated: “By leveraging INTL FCStone 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 flows, we believe we can increase revenue capture by internally crossing more spreads and getting better execution from markets. Besides, 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.”
US Digital Consolidation
GAIN Capital has become one of the most prominent digital brokerages in the United States. They maintain more than 130+ institutional and retail investors through their blockchain exchange. The announcement that Gain Capital is being sold to INTL FCStone Inc indicates the continuously growing level of consolidation. The US Blockchain Market has seen increased deals from large-name Wall Street firms like Morgan Stanley and Charles Schwab. Financial analysts expect that the blockchain market will eventually become controlled and monopolized by these Wall Street firms. It should be noted that consumers with GAIN Capital will receive an influx of products if the INTL FCStone deal is approved.
The chief executive officer of GAIN Capital, Glenn Stevens, also spoke on this acquisition deal. He stated: “GAIN’s business fits naturally within INTL FCStone 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 to provide 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.”
Those statements continued with: “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.”