FXCM once again underpays for an acquisition
Leading retail FX brokerage FXCM (a member of LeapRate’s Approved List of global Forex firms) announced its fourth acquisition over the past two years (see table below), this time buying (50% of) UK-based Lucid Markets, an FX market maker for the institutional market. Lucid is just three years old, yet brought in revenues of $149 million and earned EBITDA of $113 million in 2011 – more than FXCM itself earned ($112 million) in 2011!
The $176 million deal, paid for mostly in newly-issued FXCM shares, values Lucid at $352 million. And with an interesting deal structure it appears as though FXCM will eventually (within four years) either own Lucid outright, or sell it back to its founders.
Ignoring the strategic elements of the deal, FXCM has struck another purchase at seemingly very attractive valuation multiples, from the acquiror’s perspective. Essentially, it has bought a rapidly growing business in its space, which earned more money recently than FXCM itself did, in return for 11% of its own equity plus a portion of the extra cash-on-hand at FXCM.
FXCM once again underpays for an acquisitionConclusion
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