LCG receives three "preliminary approaches" to buy business
Share price rises close to 25% on news that Cantor Fitzgerald Europe, GAIN Capital Holdings, and City Index Limited have made official approaches to buy the entire company - trio have until 12 March to declare intentions.
Online financial services trading and spread betting operator London Capital Group has received three individual “preliminary approaches” for a potential acquisition of the business, the firm has revealed following a near 25% spike its share price today.
Responding to the share price rise LCG said it had received interest from Cantor Fitzgerald Europe, GAIN Capital Holdings, and City Index Limited regarding a possible acquisition of the entire issued and to be issued share capital of the business. There is, however “no certainty that any of these approaches will lead to an offer being made,” it said in statement sent just before 4pm GMT this afternoon.
The City Code on Takeovers and Mergers requires Cantor, GAIN and City Index 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 this year.
“A further announcement will be made as appropriate”, the company added.
The company has a market capitalisation of £25m with its share price rising 23.75% or 9.5p form an opening price of 40p as trading opened this morning to 49.5p at the time of writing.
In a trading update ahead of the publication of its full-year results later this month year LCG reported a 27% drop in group revenue for the year ending 31 December blaming the significant year-on-year decline on “low market volatility”, which contributed to “suppressed” trading volumes in the H2 of 2012, after marginal growth in the first half of the year. This saw group revenue drop from £39m in 2011 to £28.6m, with the company expecting to make an adjusted loss before tax in the region of £0.2m as a result.
In the same statement on 10 January this year the company’s chief operating officer Rachel Woodford stepped down from her role in order “to pursue other interests.” Woodford is expected to serve a six month notice period before leaving the company in July. This followed the resignation of chairman Richard Davey in August last year.
The company also announced an update on an efficiency review, and review of its overseas subsidiaries, launched in October 2012. Carried out during Q4, the review has allowed the board to identify 15% of potential savings across LCG’s cost base, with the required changes to bring about the savings to be introduced by the end of 2013.
Later that month Gibraltar-licensed operator BetVictor agreed a deal which will see LCG provide it with a white label financial spread trading platform. The platform allows users to trade indices, FX, equities, bonds and commodities on the BetVictor Financials website, which has already gone live. Financial Services Authority-regulated LCG also has a B2B partnership with bwin.party covering the InterTrader.com site, while it signed a similar deal with Betfair concerning the Tradefair offering, which is owned by the LMAX business in which the London-listed operator agreed to sell its stake in December last year.