IG Group strikes $1bn deal to buy US broker
IG Group is to expand its US presence after agreeing a $1bn deal to acquire American broker tastytrade, the online trader announced on Thursday, as it posted record interim numbers.
IG said a total of $1bn will be paid to shareholders in tastytrade, a specialist in exchanged traded options and futures, $300m of which will be in cash and the remaining amount via 61.0m IG shares valued at $700m.
Chief executive June Felix said: "This is an incredibly exciting, landmark deal that is fully aligned to [our] growth strategy. It will see IG diversify into the high-growth market of US exchange traded options and futures, a market with an estimate 1.5m retail traders, and we are confident that this transaction will materially expand our US presence."
The announcement came as the FTSE 250 firm posted record interim numbers, after the Covid-19 pandemic saw volatility spike across markets. Net trading revenue in the six months to 30 November surged 67% year-on-year, to £416.9m, while pre-tax profits jumped 129% to £231.1m. IG said both figures were a record.
Active clients rose 55% to 238,600.
Felix said: "Demand for our products remained high, benefitting from favourable trading conditions.
"While the level of financial market volatility has reduced from the peaks seen in the fourth quarter of the 2020 full year, it remains elevated and the macro environment continues to be uncertain.
"Should we see further normalisation in financial market volatility, or a stabilisation in the macro environment, we would anticipate some reduction in the level of client acquisition and activity. However, our active client base in now materially larger, with levels of new client retention comparable to historical averages."
The tastytrade deal, which remains subject to regulatory clearance, is expected close later this year.