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The Saga Continues: GAIN Capital Shares Down By 20%

May 03 2013
By

We all love a bit of good, heart-gripping drama, especially if it comes in instilments (kind of like a soap opera, you know). And we all know the Forex trading industry never lacks for excitement and intrigue, right? Right. Well, then, here we go again with the latest development of the GAIN Capital saga.

You may remember that last month, FXCM made a proposal to buy out GAIN Capital, which was promptly turned down. Instead, GAIN opted to acquire broker GFT and try to make it on its own.  In today’s episode, the struggle continues as the company’s shares are reported to have declined by 20%, and are pretty much back where they were when FXCM first put forward its offer. In fact, eight of those 20% were lost in a single day (Wednesday, May 1).

So what happened, you ask? It all started back a month ago, when FXCM first proposed to acquire GAIN Capital for the sum of $210,400,000. This in turn led to GAIN shares jumping by a record 27%, from $4.27 per share to $5.47 per share in the space of a single day. GAIN, however, had some other ideas in mind and was not willing to be bought out without a fight. The company struck back with a “poison pill” tactic allowing existing shareholders to buy more shares at a significant discount, if more than 15% of the company’s common stock is bought by any single entity. Then, at the end of April, GAIN Capital finally turned down FXCM’s acquisition proposal and announced it would be purchasing GFT instead (remember, GAIN already took over GFT’s US client base back in December).

Judging by the numbers, however, shareholders are not quite as happy with this turn of events as was expected – hence, the drop in share value. Luckily, the company’s clients must be of a different mind, since its retail brand, Forex.com, is still among the top 5 retail brokers (in the US, at least), just a couple of steps below FXCM itself. And since clients are what makes a broker tick, it seems GAIN’s bold move may turn out to be just what was needed after all!



About GAIN Capital

 

GAIN Capital Holdings, Inc. (NYSE: GCAP) is a global provider of online trading services. GAIN’s innovative trading technology provides market access and highly automated trade execution services across multiple asset classes, including foreign exchange (Forex or FX), contracts for difference (CFDs) and exchange-based products, to a diverse client base of retail and institutional investors.
 
Through our retail brand, FOREX.com, we provide retail traders around the world with access to a variety of global OTC financial markets, including Forex, precious metals and CFDs on commodities and indices. GAIN Capital also operates GTX, a fully independent FX ECN for hedge funds and institutions; OEC, an innovative online futures broker; and GAIN Securities, Inc. (member FINRA/SIPC) a licensed U.S. broker-dealer.
 
GAIN Capital and its affiliates have offices in New York City; Bedminster, New Jersey; London; Sydney; Hong Kong; Tokyo; Singapore; Beijing; and Seoul.
 

TAGS: gain  gain capital  forex.com  shares 

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