Gain Capital and GFT – Quick Math

I work in the Margin Trading Products industry, and have for years.  Recently there have been a number of M&A deals, and I like to keep track of who is who, what are the prices, and why deals make sense (or don’t).

Gain Capital (ticker: GCAP) announced the completion of it’s acquisition of privately-held GFT yesterday and they broke out some numbers:

GFT ownership gave up $73 mio in cash. Got $40 mio plus a $33 mio 5 year note at 8.5%.   Means the cash is flat.

GFT ownership got 3.6 mio shs of Gain (now at $13 per share) for a value of almost $47 mio. GFT turned over client assets of $208 mio.

Seems like Gain paid a price of better than 21% of client assets. Lots of brokers out there would love to sell for a price tag that is 20% of client assets.

I wonder if the 3.6 mio shares was locked in when the deal was announced. Gain was at approx $5 per share then. If the amount of shares was locked in at the time of the announcement, it means GFT was willing to accept $18 mio for the $208 mio of client assets (less than 9% price tag). Now with the price of GCAP at $13, GFT ownership struck a winning trade.

If instead the value of $47 mio was locked in at the announcement, then Gain shareholders win as there is a lot less dilution handing over 3.6 mio shares at $13 each compared to handing over just over 8 mio shares if they were still at $5.

For a company like GFT, who had recently been shut out of the US market by the regulators…….it looks like this was the deal of the decade.


TGFTF = Thank Goodness for Tom Friedman

I think many Americans are like me when it comes to the Middle East; it is too tough to keep track of which faction is which, who hates who, which alliances are in place at the moment, and the whole region remains in a state of perpetual hatred that has no foreseeable end.  So I tend to gloss over news from the Middle East.  I know it is important, but it is too confusing and nothing ever gets resolved.

So thank goodness for Tom Friedman of The New York Times.  He knows the facts, understands the situations, and puts out analysis that helps me keep track it that region of the world.

Here is his column from yesterday.

Tough Week For Obama

Don’t need to go into much detail here.  There are headlines and full stories in major media that give all the details one needs.  Suffice it to say that Obama had a tough week.

I want to be clear; though I do not agree with his agenda or politics, I want the President of the United States to be successful in what he does.  Especially with regards to international issues.  America being seen as weak is not good for the world, for the US, for me or my children, etc.  So I want Obama to be a successful leader.  And I know that some will say that partisan politics are at an all-time high which contributes to Obama’s lack of success….but dammit, he is POTUS.  Get a win up on the board.

1) Putin wins the battle for how to handle Syria

2) Summers is nominated, and then opts out because he knows he can not get through the Senate.

3) AFL-CIO leaders publicly split from Obama over ObamaCare costs to union supports

4) The Debt Ceiling debate begins anew.  Obama merely kicked the can down the road last time.  And there is no reason to think he will stand his ground and force a true resolution this time.

I do hope that this week gets better from Obama.  He is POTUS (President of The united States) & we are POTUS (People of The United States).  We are in this together.

Putin Trumps Obama

In general I refrain from writing about the politics and issues of the Middle East.  It is not they they are unimportant; it is that the issues are so deep-rooted, I do not expect any significant change from the current norm in my lifetime.  Occasionally the names change, or the country of focus changes, but it is religious hatred at it’s worst, and political leaders at their worst.  Matt Damon’s character in the movie Syriana had it correct.  Speaking to a junior political leader of one of the Emirates…..”You know what the business community thinks of you? They think that a hundred years ago you were living in tents out here in the desert chopping each other’s heads off and that’s where you’ll be in another hundred years, so, yes, on behalf of my firm I accept your money.”

I write about it today because Obama has once again lost face in front of the globe.  Just like when he toured the world and seemingly apologized to the world with speeches in Europe and Asia, just like when Russia offered Edward Snowden asylum, he now announces plans to take action against Syria, only to back off those plans.  In the meantime Russia’s Putin publicly stated he would not allow for Obama to take his actions, and he is driving the agenda in Syria.