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GAIN Capital Acquires Majority Stakes in GAA, Top Third

GAIN Capital, the US online trading expert which we know for its ownership of retail Forex brand FOREX.com, on Wednesday announced the acquisition of majority interests in Global Asset Advisors, LLC ("GAA") and Top Third Ag Marketing LLC ("Top Third"), in a move set to diversify the offering of the group. GAIN now owns 55% of the outstanding shares in each of the businesses, with the group having a call option to purchase the remaining 45% stakes. The deals are set to close within 30 days after the announcement and to be accretive in 2014. 

 
Although financial details of the acquisitions were not disclosed let's not forget that we have some theoretical limits at which to look – for instance, the USD 80 million which GAIN managed to raise in a convertible senior notes offering in November 2013. 
 
And now, after we've ridden you with particulars and numbers, let's consider the rationale for the move. For starters, both businesses are in compliance with the profile of an acquisition target which GAIN Capital's chief executive Glenn Stevens depicted during the earnings call following the release of the 2013 metrics. He noted back then that any acquisition should lead to synergies and diversification of the product offering. And indeed, this aim is reached given that GAA operates Daniels Trading – a futures trading firm, which has been the biggest introducing broker of GAIN in the futures segment. And during the conference call Stevens particularly mentioned that the group will target the futures market, set free from some key players like MF Global and Refco.
 
 
The acquisition of a 55% stake in Top Third is particularly interesting, as the company is a relative newbie – it has been active since 2006. However, it also fits well in the strategy that GAIN pursues towards diversification. In fact, thanks to the deal GAIN enters into a totally new niche for its business -  that of options-based hedging strategies. 
 
Commenting on the deals, Stevens noted that there are “business synergy and cross-sell opportunities between GAA and our existing futures business, as well as the retail OTC business, FOREX.com”.
 
 
You can read the official press release below.
 
GAIN Capital Expands Futures Business with Purchase of Majority Interest in Global Asset Advisors and Top Third Ag Marketing
 
BEDMINSTER, N.J., NEW YORK and CHICAGO, March 12, 2014 /PRNewswire/ -- GAIN Capital Holdings, Inc. (NYSE: GCAP), a global provider of online trading services, today announced it will expand its futures business through majority investments in both Global Asset Advisors, LLC ("GAA") and Top Third Ag Marketing LLC ("Top Third"). 
The Chicago-based Global Asset Advisors operates Daniels Trading, an independent futures brokerage firm founded in 1995 by futures industry veteran Andy Daniels.  The acquisition extends a longstanding commercial relationship between GAIN Capital and GAA; Daniels Trading is currently the largest introducing broker to GAIN Capital's futures business.  Founded by Mark Gold in 2006, Top Third helps clients use options-based hedging strategies to manage the risks of producing agricultural products.
"Today's announcement marks the latest in a series of measured steps we are taking to expand our presence in the futures industry and to diversify our revenue through the growth of our commission businesses," said GAIN Capital CEO Glenn Stevens.  "Our ownership stake in GAA provides us with a full service retail futures offering via Daniels Trading and our ownership stake in Top Third allows us to address an entirely new segment of customers."  We see significant business synergy and cross-sell opportunities between GAA and our existing futures business, as well as our retail OTC business, FOREX.com."
"We are excited to be partnering with GAIN," said Andy Daniels, CEO of GAA.  "They have been very successful in building a global online retail trading business, offering customers industry-leading standards of service.  Together, we believe we have an excellent opportunity to do the same for the retail futures industry.  At the same time, the ownership structure allows us to continue to support our existing customers and partners as we have done for the last two decades."
The transactions will involve the purchase of 55% percent of the outstanding shares of GAA and Top Third from their major shareholders.  GAIN Capital has call options to acquire the remaining 45% of each company.
GAA and Top Third will continue to operate as separate brands, and their respective management teams will remain in place.  
The transactions are expected to close within 30 days, subject to customary closing conditions.  GAIN anticipates the transaction to be immediately accretive to its 2014 financial results. 
GAA and Top Third were advised by Chartwell Capital Solutions.
 
 

About GAIN Capital 

 
GAIN Capital Holdings, Inc. (NYSE:GCAP) is a global leader of online trading services provision. GAIN's technology offers market access and automated trade execution across multiple assets, including Forex, contracts for difference (CFDs) and exchange-based products, to both retail and institutional investors.
Through its retail brand, FOREX.com, GAIN provides retail traders across the globe with access to various OTC financial markets. FOREX.com supports clients from more than 140 countries, with its products and services available in many languages, including English, Arabic, Chinese, Japanese, and Russian.  
GAIN Capital and its affiliates boast offices in New York City; Bedminster, New Jersey; London; Sydney; Hong Kong; Tokyo; Singapore and Beijing.
TAGS: gain capital  forex.com  us forex  us forex broker  gain capital acquisition  gaa  forex deal  forex market  us forex  top third  global asset advisors  top third ag marketing 

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