Thomson Reuters agrees to acquire FXall for about $643 million

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Thomson Reuters has agreed to acquire full control of FXall, the world’s leading FX multi-dealer platform with non-financial corporates and asset managers, for about $643 million, as it attempts to broaden its brokerage fee-based business beyond the interbank FX market.

The takeover comes five months after FXall’s initial public offering (IPO), where it sold 5.98 million shares, or 21% of the outstanding shares, and raised $71.76 million to pay exiting shareholders in the 10-year-old company. Thomson has paid a sizeable premium from the $12-a-share listing price, agreeing to pay $22 a share. A tender offer for the shares will be conducted, subject to standard regulatory approvals. The largest group of shareholders are Technology Crossover Ventures, Phil Weisberg, FXall chairman and chief executive officer, and John Cooley, FXall chief financial officer, who combined own 32.5% of FXall’s outstanding shares. The FXall board has unanimously recommended that all shareholders tender their shares in the offer, Thomson Reuters says in a statement. “Thomson Reuters and FXall have established leading positions in complementary aspects of electronic FX trading,” says Abel Clark, managing director, marketplaces, Thomson Reuters, in a statement. “This combination will enable us to provide our customers with integrated management of trades through the entire lifecycle, delivering the benefits of a more streamlined trading process and more efficient execution.” The takeover brings together one of the FX markets largest electronic interdealer brokers with the world’s largest bank-to-customer multi-dealer platforms. Thomson Reuters has had average daily turnover of $136.8 billion so far this year, down from an average of $150.66 billion for all of 2011, and $139.75 billion in 2010. At the same time, FXall said on Friday that average daily volumes rose to a record $98.6 billion in June, up 10% from the previous month. Average daily volume for the second quarter was an all-time high of $92.4 billion, up 6% on the first quarter of 2012 and 8% higher than the second quarter of last year. Although it is not known how long Thomson has been eyeing a potential takeover of FXall, some market sources say that by first conducting an IPO, it provided potential suitors with an independent valuation of the company. While there is little crossover between the two platforms, last week FXall announced it had begun offering live option pricing on its platform, in what would be fully integrated with its spot, forwards and non-deliverable forwards (NDF) products. That pitted it against Tradeweb, a fixed-income trading platform, which launched an FX option platform in February. Tradeweb is 60% owned by Thomson Reuters, with the remaining 40% owned collectively by 10 investment banks. A Thomson Reuters spokesman says it is too early to determine how the integration of the two companies proceed. The details of the tender offer will be released in filings from the Securities and Exchange Commission in the coming days.