GAIN Capital withdraws from LCG bid race

Forex trading business GAIN Capital Holdings has said it has “no intention” of making a formal offer to buy financial trading and spread betting operator London Capital Group (LCG) just 10 days after declaring a preliminary interest alongside two other firms.

On 12 February, LCG announced that it had received three preliminary approaches from GAIN, Cantor Fitzgerald Europe and City Index Limited regarding a possible acquisition of the entire issued and to be issued share capital of the business.

LCG’s share price rose 25% spike on the news 10 days ago.

The City Code on Takeovers and Mergers requires the two remaining interested companies to either announce they do not intend or announce a firm intention to make an offer for LCG by no later than 5pm on 12 March.

Two days ago LCG’s decade-long CEO Simon Denham resigned with immediate effect on the same day the spread betting firm announced year-on-year annual revenues were down 27%, a £7m profit in 2011 had been turned into a £200,000 loss and that it would not pay shareholders a dividend as a result.

Announcing its annual results for the year ended 31 December 2012 company chairman Giles Vardey admitted 2012 was a “difficult” year for the group and called financial results “disappointing” with a “marked decline in customer trading activity, especially in the second half of the year”.

He said lower levels of volatility in markets overall meant that there were less trading opportunities for LCG’s customers to pursue. As a result revenues were 27% lower than 2011 and profits declined throughout the year leading to a £0.2m adjusted loss before tax for the year as a whole.