One would think that the largest financial services provider in the United States would forever remain at the top. INTL FCStone has proven that we are all wrong by announcing our acquisition of GAIN Capital earlier today.
Gain Capital Holdings, Inc. Wall Street was disappointed with poor 4Q earnings for the full fiscal year 2019. Net revenue decreased by 33% compared with the previous quarter, and by 35% compared to the same period last year.
In monetary terms, this is $53.3 million for the 4th quarter and $234 million for the fiscal year.
The company’s CEO explained that last year the company’s earnings were affected by unusually low volatility. The decline in market activity also led to a decrease in financial performance.
Quarterly charts showed that net loss increased to $31.2 million from $0.7 million for the same period last year. The full year brought a net loss of $60.8 million, compared with a net income of $28 million achieved in 2018.
About purchasing GAIN Capital
After receiving confirmation from the Boards of Directors of both countries, INTL FCStone will buy GAIN at a price of $6 per share. The total transaction amount is about $236 million. The companies plan to complete the deal in mid-2020, after approval by GAIN shareholders and regulators. This can increase transaction flows and increase the customer base to $1 billion.
INTL FCStone CEO Sean O’Connor will lead the company after formalizing the deal. Meanwhile, GAIN CEO Glenn Stevens will continue to run his business until the merger.
Commenting on the deal, O’Connor noted that his company could expand its GAIN product offering to stimulate market share growth. He plans to attract additional companies from existing customers and make further acquisitions possible.
By increasing and combining the transaction flows of the two companies, O’Connor seeks to increase profitability. This will achieve better performance in the markets.