Despite the buzz throughout the Forex world about the potential merger between two of the largest Forex brokers, such a conglomeration is, apparently, not to be. According to a press release from FXCM, the company will not be purchasing Gain Capital Holdings Inc. (GCAP) despite its previous intentions to do so. Conflicting reports show FXCM making an unsolicited stock offer of between $195 million and $210 million for Gain Capital on April 8. Differing news releases indicate that either Gain Capital rejected the proposed acquisition as "?significantly" low or that FXCM withdrew its offer because Gain has gone ahead and purchased GFT, the trade name for Global Futures & Forex Ltd.
The New Jersey based Gain Capital will pay about $108 million in cash, stock and debt for Sydney-based GFT, a provider of retail foreign-exchange and derivatives trading. According to Gain Capital Chief Executive Officer Glenn Stevens, the transaction is a "?significant opportunity to grow our business across the spectrum of retail and institutional products."
FXCM's withdrawal of the bid to purchase Gain Capital came only two weeks after FXCM launched the hostile bid potentially merging two of the biggest U.S.-based companies that offer online foreign-exchange trading, a business mainly targeted at small "retail" investors.
FXCM Inc. is a global online provider of foreign exchange trading and related services to retail and institutional customers world-wide. The broker's "?No Dealing Desk Forex trading" allows clients to benefit from FXCM's vast network of Forex liquidity providers which gives FXCM the opportunity to offer competitive spreads on major currency pairs.
FXCM's U.K. subsidiary, Forex Capital Markets Limited, allows clients to trade oil, gold, silver and stock indices along with Forex on one platform. It also offers CFD products with no re-quote trading.
Gain's decision to purchase GFT comes during a period of consolidation in the retail foreign- exchange business, particularly in the U.S., where retail foreign-exchange trading industry has downsized in the past two years amid shrinking volumes and stiffer financial regulations.
GFT is Gain Capital's largest acquisition to date. The company had already bought the U.S. individual accounts of GFT Forex in December. Over the past eight months, Gain has purchased two other retail brokerages: Open E Cry from Charles Schwab Corp.'s (SCHW) optionsXpress Holdings Inc. and FX Solutions LLC. Mr. Stevens said the company plans to continue pursuing more acquisitions this year.