FXCM Inc. (FXCM, Financial), a leading forex trading service provider, revealed that it has completed the sale of DailyFX.Com, its research portal and news section, to the IG Group (LSE:IGG, Financial), a renowned online trading firm, for a sum of $40 million. This announcement came amid speculations in the market that have been making the rounds in the last couple of months.
According to the settlement, the payment to FXCM will be split into $36 million in cash which has already been handed over while the remaining $4 million will be paid upon completion of the deal. The full payment represents nearly half the amount FXCM owed to Leucadia National Corp. (LUK, Financial).
When the agreement was made public in September, many players in the industry were shocked by the news since FXCM had not listed the sale of the online trading news portal as among the items of which it was planning to dispose. The firm was offloading some of its assets in the Leucadia bailout that had been occasioned by the SNB crisis that crippled the firm.
The online foreign exchange brokerage firm had taken out a loan of $300 million from the lender so as to meet the minimum capital requirement of $20 million that was set in January 2015 during the Swiss franc-related turmoil and also to foot the losses incurred by the client.
The brokerage also was forced to offload two of its subsidiaries, FXCM Hong Kong (also known as FXCM Asia) and FXCM Japan Securities to Rakuten Securities, a Japan-based Firm.
According to sources from the FXCM headquarters in the U.S., money made from the sale will be used to reduce the debt the firm owes Leucadia. To date, the brokerage has so far paid $154 million and the remaining amount is $156 million. When the remaining $4 million from the $40 million deal is paid, FXCM will have paid off more than 50% of its debt.
Drew Niv, the CEO of FXCM, says this deal marks yet another milestone for FXCM in its bid to clear the debt owed to Leucadia, and the firm is aiming at using cash raised from operations and disposal of noncore assets.
FXCM assured its clients that despite the sale of the online news portal, it will still be able to access IG’s DailyFX PLUS and also receive analytics, financial news and forex education resources via the FXCM Trading station platform and its web domains. Furthermore, the brokerage plans to launch a password protected webpage known as FXCM Plus for its FXCM live clients where they will receive technical alerts, trader sentiment data (SSI), signals and live webinars.
FXCM is the majority shareholder owning 50.1% stake in the FXCM Group while Leucadia owns the rest of the shares following a definitive treaty signed between the two firms as part of amending the credit letter agreement terms. At the beginning of this month, FXCM announced the start of the $15 million “at-the-market” campaign that seeks to reduce the Leucadia debt.
Quayle Munro, an independent advisory firm that focuses on mergers and acquisitions, was the key advisor for FXCM during the agreement.
Disclosure: I do not own any shares or any stocks mentioned in this article.
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