FXCM has released the slide deck for its upcoming conference call where the broker will explain the details and benefits of its proposed acquisition of rival GAIN Capital. The presentation provides a transaction overview, benefits to GAIN Capital shareholders and clients, and challenges for GAIN if it remains a standalone company.
In terms of shareholder benefits, FXCM is making the case that a merger would lead to significant operating synergies which could lead to $80-$100 million additional cash. Based on this projection they expect the deal to be accretive to earnings for 2014. They also added that the combined brokers would experience “improved balance sheet strength, liquidity, and trading characteristics”.
As highlighted in their previous press release, FXCM is offering $5.35/share, which is a 25% premium to yesterday’s closing price of GAIN Capital. In the combined company, GAIN shareholders will assume 12.8-16.2% ownership (depending on how much cash is elected to be received by shareholders). The share portion is 0.3996 shares of FXCM stock.
In regards to GAIN shareholders, FXCM is arguing that at $5.35, the offer price is above GAIN’s 52 week high of $5.19 and 80x their 2012 net income. They added that GAIN ‘currently faces operation and financial difficulties due to its scale’ which would be enhanced through the merger. Also, the EPS accretion could lead to greater stock appreciation in the future.