GAIN Capital’s CEO on acquisition rumours: “We don’t live in a cave”

Maria Nikolova

“We have done a fair amount of M&A over the past decade, but that doesn’t mean that we don’t properly and rightfully entertain any incoming as well”, Glenn Stevens says.

Whereas online trading major Gain Capital Holdings Inc (NYSE:GCAP) posted its key financial metrics for the second quarter of 2019 last week, many were awaiting for a bit of news regarding an unconfirmed rumour about a possible business combination of the brokerage and Plus500…

This matter was addressed, albeit indirectly, during the Earnings Call (credit for transcript goes to Seeking Alpha) following the publication of the results.

Rich Repetto of Sandler O’Neill asked:

“But how would GAIN, what would be the view on consolidation in regards to the benefits of merger with someone else? Not just keeping dry powder for potential European acquisitions or anything like that, but just…”

GAIN Capital’s CEO Glenn Stevens replied:

“We definitely, in representing our shareholders and our stakeholders, are always in discussions, and when I say in discussions, have fiduciary responsibility to evaluate opportunities both ways, right? I mean we’ve been pretty active on the acquisition front”.

“We’ve done a fair amount of, for a relatively small company, have done a fair amount of M&A over the past decade, but that doesn’t mean that we don’t properly and rightfully entertain any incoming as well. So I don’t have any comment to speculate on rumors that go out there because not only is it company policy, but it’s not helpful”, he added.

“But that said, we also don’t live in a cave and have a complete closed door when we say, look, if there’s value to be created, that we’re supposed to, with standard fiduciary responsibility, evaluate opportunities in both directions”, Mr Stevens said.

Let’s recall that GAIN saw GAAP net income for the three months to end-June 2019 amount to $0.9 million, down from $6.8 million in the corresponding period a year earlier. Earnings per share in the second quarter of 2019 amounted to $0.02.

GAAP net revenue in the three-month period to June 30, 2019 was $75.5 million, down from $84.2 million in the year-ago quarter.

Adjusted net income totalled $3.6 million in the second quarter of 2019. Adjusted EBITDA for the peeriod was $13 million.

New direct accounts increased 83% year-over-year and 5% quarter-over-quarter in the three-month period to end-June 2019.

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