Following a relatively short courtship between FXCM and GAIN Capital's senior management, in which FXCM made an unsolicited bid to acquire GAIN Capital during the early stages of this month, the talks have resulted in a complete withdrawal by FXCM as a result of GAIN Capital's proposals to purchase GFT.
The proposed merger between FXCM and GAIN Capital garnered interest both in North America and overseas as such an Acquisition would have resulted in the new entity becoming the world's largest Forex brokerage.
Drew Niv
Founder and CEO, FXCM
One of the tenets of the merger was that FXCM had planned to migrate Forex.com customers to its platforms. Responding to questions during a conference call with Forex Magnates on whether the company will be able to retain customers despite the migration, FXCM CEO Drew Niv answered that the company expected clients to stay with them, and have had success in this regard in previous mergers.
As GAIN Capital commenced the early stages of discussions relating to its acqusition of GFT, FXCM cited this as the reason for not proceeding further, providing GAIN Capital with a satisfactory outcome.
"The cash consumed in the acquisition of GFT fundamentally impacts the balance sheet and capital synergies that were an important driver behind our proposal," said Drew Niv, Chief Executive of FXCM.
GAIN Capital considered FXCM's proposal a hostile bid, and therefore swiftly took action by formally rejecting FXCM’s unsolicited offer and announcing an intention to acquire rival broker GFT. GAIN Capital has recently had close ties with GFT as it acquired the firm’s US customer base when they exited the country last year. This development yesterday made the potential acquisition irrevocably unattractive for FXCM.
GAIN Capital's purchase of GFT is of significant importance to the company, and a conference call was held yesterday during which GAIN Capital's CEO Glenn Stevens and GFT's CEO Gary Tilkin provided Forex Magnates with a detailed analysis of the proposed merger.
