Gain Capital (NYSE: GCAP) has entered into a definitive agreement to acquire City Index (Holdings) Limited ("City Index"), a leading online trading firm specializing in contracts-for-difference (CFDs), forex and UK spread betting, for approximately $118 million, or a net purchase price of $82 million, including $36 million in cash on the company's balance sheet.
The combination of GAIN Capital and City Index creates a global leader in online trading, operating two market-leading brands in GAIN's FOREX.com, a top retail forex brand globally, and City Index, a premier CFD and spread bet brand. The combined company will service 235,000 retail customers in over 180 countries with annual trading volumes of more than $3 trillion.
"The acquisition of City Index advances our growth strategy, creating scale for our retail business and accelerates the development of our innovative trading technology," said Glenn Stevens, GAIN's chief executive officer. "The combination will result in a balanced mix of customer volume, with approximately 61% of retail volume coming from FX and 39% from CFD trading/UK spread betting in other asset classes such as equities, indices and commodities. We look forward to leveraging the City Index brand in key markets and working with the team at City Index, who share our commitment to creating a superior customer experience."
"This transaction is a landmark moment in City Index's 30-year history as a leader in retail trading," said Mark Preston, City Index's Chairman and Chief Executive. "The combination of GAIN's unrivalled leadership in global foreign exchange with City Index's internationally-recognized CFD business creates a world-class industry leader, providing the scale and capability to deliver the ultimate trading experience to our clients around the world. The combined business will also offer greater opportunities for City Index's management and staff to flourish in a global business."
Founded in London in 1983 as one of UK's first spread betting companies, City Index is today one of the world's leading providers of CFDs, forex and UK spread betting, offering more than 10,000 products across equity, index, FX, commodity and bond CFDs and spread bets. City Index is majority owned by IPGL, the private holding company for the interests of Michael Spencer, Founder and Chief Executive of ICAP plc, the global markets operator.
"I am very pleased we have been able to agree to this transaction, which brings benefits for everyone," said Michael Spencer. "I believe GAIN is an outstanding company and will be able to move City Index to the next level, by leveraging its broad array of trading products and services onto a global platform. We believe this combination will enhance GAIN's leadership position in the FX/CFD industry by putting together two highly complementary companies to create significant value for customers and stakeholders. This is the latest example of the way that IPGL is able to invest actively in businesses over the long term to support their growth and development."
For the 12 month period ended September 30, 2014, City Index generated $124.8 million in revenue and $10.7 million in adjusted EBITDA. It had approximately 104,000 funded retail accounts and $344 million in customer assets as of September 30, 2014.
The combined company will have pro forma client assets of approximately $1.2 billion, and trailing twelve month revenues and adjusted EBITDA, for the period ended September 30, 2014, of $462 million and $61 million, respectively. GAIN has identified $45 million - $55 million of fixed operating expense synergies, relative to the combined company's trailing twelve-month expenses, and expects to begin realizing theses synergies promptly after closing with full integration achieved over the ensuing 18-24 months. GAIN expects for this acquisition to become highly accretive over this time period and anticipates achieving accretive results by the fourth quarter following closing.
The transaction follows the successful acquisition and integration of GFT, which closed in September 2013, where GAIN Capital achieved approximately $40 million of run rate expense synergies.
City Index clients will not see any immediate impact to the customer service they receive, their account administration or how they trade. All clients will receive more detailed information about the benefits the combined company can offer them, once the acquisition is completed.
Terms of the Transaction
The purchase price will consist of $20 million in cash, $60 million of convertible notes and the issuance of approximately 5.3 million GAIN shares. The total purchase price of $118 million represents a $28 million premium above City Index's book value as of September 30, 2014.
In addition to the $36 million of cash on its books as of September 30, 2014, City Index also has $65 million of net operating losses which can be carried forward following the closing of the transaction.
The transaction is subject to approval by GAIN Capital stockholders, regulatory approvals and customary closing conditions. The deal is expected to close in the first quarter of 2015.
Jefferies LLC is serving as exclusive financial advisor to GAIN Capital. Keefe, Bruyette & Woods, A Stifel Company is serving as financial advisor to IPGL. Davis Polk & Wardwell advised GAIN Capital on U.S. and UK legal matters. Macfarlanes advised IPGL and City Index on UK legal matters and Kirkland & Ellis advised IPGL and City Index on U.S. legal matters.
Omega Healthcare Investors (NYSE: OHI) and Aviv REIT, Inc. (NYSE: AVIV) announced that the Boards of Directors of both companies have unanimously approved a definitive agreement under which Omega will acquire all of the outstanding shares of Aviv in a stock-for-stock merger. The transaction values Aviv at $3.0 billion, and creates the premier publicly traded pure-play skilled nursing facility real estate investment trust (“REIT”).
Under the terms of the agreement, Aviv shareholders will receive a fixed exchange ratio of 0.90 Omega shares for each share of Aviv common stock they own. Based on the closing stock price for Omega on Thursday, October 30th, 2014, this consideration would be equivalent to $34.97 of Omega stock for each Aviv share, representing a premium to Aviv shareholders of approximately 16.2% over Aviv’s closing stock price on that day. Upon closing of the transaction, Omega shareholders are expected to own approximately 70% and Aviv shareholders, together with the limited partners of Aviv Healthcare Properties Limited Partnership (“Aviv OP”), are expected to own beneficially approximately 30% of the combined company. The stock-for-stock transaction is intended to be tax-free to shareholders. Following the merger, Taylor Pickett, current Omega CEO, will continue to serve as CEO of the combined company while Craig Bernfield, current Aviv Chairman and CEO, will join the Board of Directors of the combined company.
“The combination of Omega and Aviv creates the premier pure-play skilled nursing facility REIT which, with the expertise and proven track records of the combined management teams, will be well-positioned to continue as the leading consolidator in the large, highly fragmented SNF industry,” Omega Chief Executive Officer Taylor Pickett said. “This merger is consistent with Omega’s long history of executing value-creating transactions. The combined sourcing and development capabilities of this company, coupled with its strong balance sheet, provides enhanced capacity to drive growth and is expected to continue to decrease our cost of capital. The combined company will have unrivaled resources to pursue attractive acquisition and development opportunities within its base of existing operator relationships and will also have the human and capital resources to pursue new operator relationships for continued external growth.”
Craig Bernfield, Chairman and Chief Executive Officer of Aviv, said, "This is a strategic combination of two best-in-class companies that have been the most dedicated and successful investors in the skilled nursing sector over the past few decades. The combined company will now be positioned to be the premier consolidator of SNF real estate for years to come. Our merger with Omega will allow us to take advantage of Omega's long term success in the public markets, the scale of the combined company, and Omega's superior access to capital and lower cost of capital, to continue to drive accretive growth by leveraging our relationships with high quality operators to find attractive off market and widely marketed acquisition opportunities.” Mr. Bernfield continued, “I am extremely enthusiastic about Omega's prospects following the merger. The market opportunity is significant due to highly fragmented ownership and lack of competition from other well capitalized companies. The combined management team will be the most knowledgeable and experienced in the country. Taylor and I have known each other well during our careers and I know that he is eminently qualified to lead the combined company."
Transaction Rationale and Highlights
- High Quality and Complementary Portfolio. The combined company will have a high quality diversified portfolio including the following characteristics:
- Substantial scale and significant diversification with 83 operator relationships in 41 states
- Long-term triple-net master leases with sector-leading rent coverage
- Commitment to high quality properties
- Platforms With Superior Historical Track Records. The transaction combines the management teams of two of the leading SNF platforms, with superior track records of value creation for shareholders.
- Omega is the top performing REIT over the last ten years with a total shareholder return of 586 percent
- Aviv total shareholder return of 64 percent since its IPO in 2013
- Positioned for Continued Sector-Leading Growth. On a combined basis, Omega will be uniquely positioned to deliver SNF sector-leading growth
- Demonstrated track record of attractive acquisitions and development
- Consolidator in large, fragmented industry with attractive fundamentals
- Combined operator relationships that are expected to provide an ongoing pipeline of accretive transactions
- Over $900MM year-to-date combined investments
- Attractive Financial Impact.
- Expected to be accretive to Omega’s run rate Adjusted FFO and FAD. Preliminary combined company 2015 guidance for Adjusted Funds Available for Distribution (“FAD”) to common stockholders is a range of $2.81 to $2.87 per diluted share as compared to Omega’s 2014 FAD guidance of $2.58 to $2.61 per diluted share. The combined pipeline and unique sourcing capabilities, together with low leverage and improved cost of capital, should enable Omega to expand its growth profile with accretive transactions. Aviv’s development and redevelopment strategy, combined with Omega’s established capital expenditure financing program, is expected to provide attractive returns while enhancing asset quality. In addition, the combined company will maintain an UPREIT structure which will enable the combined company to structure tax-efficient transactions.
- Strong balance sheet and lower cost of capital to drive future accretive growth. The combined company is expected to have a pro forma funded debt to total market capitalization ratio of less than 35%, funded debt to Adjusted EBITDA (Q3 annualized) ratio of less than 5.0x, secured debt to gross asset value of less than 5.0%, and an Adjusted Pro Forma EBITDA to interest coverage ratio greater than 3.5x as of September 30, 2014. The strong unsecured balance sheet, material increase in portfolio size and tenant diversity are expected to (i) enhance the combined company’s credit profile and (ii) lower the long-term cost of capital, driving further accretion. With a history of prudent balance sheet management, Omega believes that the strength of the combined company should create positive ratings momentum.
- Stable and secure dividend with above-average growth potential, as well as a conservative pro forma payout ratio. Omega has increased its dividend at an 11% annual compounded rate since 2004 and expects continued dividend growth for shareholders of the combined company post-closing. Each company intends to continue its current dividend policy pending the closing of the transaction.
Effect on Aviv OP Limited Partners
In connection with Omega’s implementation of an UPREIT structure, holders of Aviv OP units will receive units of an Omega operating partnership based on the same exchange ratio as provided for Aviv common stock in the merger agreement. The Omega operating partnership units will be convertible into Omega common stock on a 1:1 basis following the completion of the merger (subject to adjustment based on future events as provided for in the partnership agreement).
Management and Board of Directors
Taylor Pickett, current CEO of Omega, will continue to serve as CEO of the combined company. Craig Bernfield, current Aviv Chairman and CEO, will serve in the same capacity until closing to ensure an orderly transition. Following the closing of the transaction, the Omega Board of Directors will be expanded to include three directors from Aviv, including Mr. Bernfield, bringing the total to 11 members. As part of the transaction, Omega will be requesting that its shareholders approve a proposal to de-classify Omega’s Board of Directors and provide for the annual election of directors.
Following the merger, Omega will maintain its corporate headquarters in Hunt Valley, Maryland. Dan Booth and Bob Stephenson will retain current roles as COO and CFO, respectively, of the combined company. Aviv’s Chicago based acquisition and development operations will continue to be based in Chicago under the leadership of Steven Insoft, augmenting Omega’s existing investment capabilities.
The combined companies expect to benefit from approximately $9 million of general and administrative cash savings and additional savings from reduced borrowing costs.
Approvals and Timing
Completion of the transaction is subject to satisfaction of customary closing conditions, including the approval of shareholders of both companies. LG Aviv LP, an affiliate of Lindsay Goldberg LLC, has entered into a voting agreement with Omega pursuant to which it has agreed to vote in favor of the transaction, subject to the terms and conditions set forth in the voting agreement. The transaction is expected to close in the first quarter of 2015.
Morgan Stanley & Co. LLC is acting as the exclusive financial advisor to Omega, and Bryan Cave LLP, Doran Derwent, PLLC and Kaye Scholer LLP are acting as legal counsel. PJT Partners and Goldman, Sachs & Co. are acting as financial advisors to Aviv and Sidley Austin LLP is acting as legal counsel.
The Board of Directors of Fred's Inc. (NASDAQ: FRED) today announced that it has named Jerry A. Shore Chief Executive Officer of the Company. Shore's promotion follows the Board's receipt and acceptance of notification by Bruce A. Efird of his intention to leave the Company upon the expiration of his employment contract.
Shore has served as the Company's Executive Vice President and Chief Financial Officer for more than 14 years and assumed the additional title of Chief Operating Officer in January of this year.
In connection with the change in Fred's leadership, the Company also has promoted Vice President and Controller Sherri L. Tagg to the position of Chief Accounting Officer. The Company has been working with an executive search firm to fill the vacant position of President and Chief Operating Officer and anticipates filling that slot very soon.
Commenting on the announcements, Michael J. Hayes, Chairman of the Board of Directors, said, "The Board's decision, effective today, to name Jerry as our new CEO was made in recognition of his accomplishments in guiding the fiscal management of the Company and, more recently, his notable contributions as Chief Operating Officer to the operational and strategic aspects of our business. In addition to these skills, Jerry has an intimate knowledge of the Company’s business and personnel, and he possesses the vision and strategy needed to transition Fred's to the convenience/pharmacy-centric model.
"Bruce will remain as an employee of the Company through the term of his contract," Hayes added. "We wish him all the best in the next phase of his career."
Commenting on the news, Shore said, "I am honored and excited by this appointment. For the past 10 months, I have been able to spend more time focusing broadly on Company operations, and I am confident of building a strong team that will drive deeper penetration of pharmacies in our stores and the relay of existing stores with the convenient, "need it now" format. This combination, along with a stronger marketing program, will be the cornerstone of our growth and profitability going forward."
Hayes noted that during the Company's upcoming third quarter conference call on November 25, 2014, management will discuss the Company's strategic alternatives program.
Cinedigm (NASDAQ: CIDM) and Moguldom Studios announced today they have entered into a multi-year, multi-picture deal for Moguldom’s slate of independent films, which explore stories related to the modern, pop culture experience. The deal provides for no less than 10 new films per year. Additionally, Cinedigm has acquired the distribution rights to seven catalog titles from the Moguldom Studios’ library. Cinedigm will have certain US distribution rights to the films, including digital, television, and physical home entertainment.
Moguldom Studios is a production company for the next generation, creating independent documentary films that are branded as ‘Docutainment.’ Docutainment captures the intersection of reality and traditional storytelling techniques in order to take a unique and objective look at the modern, pop culture experience.
“With its Docutainment slate, Moguldom Studios is taking on controversial and often taboo topics in a frank, entertaining and no-holds barred manner,” said Yolanda Macias, Cinedigm’s EVP of Acquisitions. “We are proud to partner with Moguldom to bring these films to audiences eager for stories that speak to and reflect not only the African American community but our increasingly cross-cultural society as a whole."
“We are very excited to partner with Cinedigm. They are the nation’s premier distributor of independent films, and we know that our partnership with them will allow our films to be consumed by the masses. These are important topics and the more people that are able to join the debate, the better,” said Brett Dismuke, President of Moguldom Entertainment.
The deal was brokered between Brett Dismuke, President of Moguldom Entertainment and Melody Fowler, Cinedigm’s Director of Acquisitions. Moguldom Studios films covered in the distribution deal include:
“A Genius Leaves The Hood: The Unauthorized Story of Jay Z”The extraordinary story of how a young hustler from the projects used the same principles to break into corporate America.
“Gunland”Exploring the stories of children affected by gun violence in Chicago.
“The Swirl”Examining the fastest growing social trend in American culture: interracial dating.
“Black Church, Inc.”The prophets for profit. Examining financial corruption of the black church.
“Bottoms Up: Rise of the Backside”The sexual celebration, exploitation and degradation of women’s most treasured and exalted asset: the almighty butt.
“72%: A Baby Mama Crisis”Gain insight into the single mother phenomenon in the African American community.
“When The Checks Stop Coming In”Find out how the IRS, bad contracts and extravagance got these celebrities into financial trouble, and hear what advice they would give to other people and celebrities on the rise to stardom.
“Bleaching Black Culture”Explore the impact that African Americans have had on art, culture, technology and more. But if the African American community is the cultural architect, why are they still outside the building begging to get in?
“Knifed Up: The Evolution of Cosmetic Surgery”Get the backstory on the everyday girl who’s hoping for plastic perfection by tapping into the $11.8 billion cosmetic procedure of breast lifts, nose-reshaping, fat injection, liposuction, tummy tucks, facelifts and Botox.
“Hating Obama”Does Obama get disrespected because of his race or does every President endure this as part of the job?
“Bossip Comedy Series (Parts 1 & 2)”Laugh with subjects taken from the most popular Bossip content while following black comedians’ lives and performances.
“Side Piece”From “Scandal” to “Being Mary Jane,” the phenomenon of sidepieces (male or female) has become an accepted occurrence in our society.
“Pop Life”A film that examines the glorification of recreational drugs throughout all aspects of the entertainment business.
“Father Forgive Him”Explore the events that took place in the Eddie Long fiasco and touch base on the sensitive subjects of homophobia, sexuality and hiding within the black church.
“Dumb It Down”The downside of US urban culture is examined in the brutally-honest expose about “keeping it real” gone wrong.
“Where is the Love?”An exploration of the notion that Black women in America have the most difficult time finding love.
Facebook's (Nasdaq: FB) Instagram is rolling out video advertisements nationwide today.
AdWekk noted earlier that Instagram had been testing video ads in certain markets over the last six months. Well, all that's changed now.
Instagram's initial advertisers include Disney, Activision, Lancome, Banana Republic and CW. The 15-second, autoplay video ads will begin appearing today and roll out further over the next several weeks.
Shares of Facebook are down 2 percent on Thursday.
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