LeapRate has learned that the previously announced acquisition of Geneva-based ACM (Advanced Currency Markets AG) by Swissquote was an all-cash transaction, priced at CHF 41.7 million ($43 million).
Some background: On October 27, 2010 Swissquote Bank Ltd. announced that it had acquired online Forex firm ACM. This followed on the heels of new rules in Switzerland governing retail Forex, in which firms offering Forex trading were required to apply for a full banking license. Not surprisingly, several of the smaller Forex firms in Switzerland subsequently either closed shop, moved outside the country, or sold out to one of the larger firms – notably ACM, Dukascopy and MIG. While MIG and Dukascopy each received a Swiss bank license, ACM was denied, leading to its sale to Swissquote.
At the time of the acquisition, the parties agreed not to disclose the acquisition price or terms. The only piece of financial data released was that ACM had earned revenues of CHF 27 million (approximately $28 million) in the first nine months of 2010.
However, with the release of Swissquote’s 2010 Annual Report, some more details of the transaction have become apparent:
- total upfront transaction value of CHF 41.7 million ($43 million).
- all paid in cash.
- ACM had CHF 91.5 million ($94 million) in client assets at the time of the acquisition.
- very little future contingent consideration – if ACM hits certain volume targets over the following 18 months, additional consideration consisting of up to 30,000 Swissquote shares (worth at the time of acquisition CHF 1.35 million, or $1.4 million) will be paid to ACM shareholders.
- ACM monthly trading volume was approximately $30 billion (estimated by LeapRate, based on revenue figures) in 2010.
In terms of valuation multiples, the ACM deal was done at a slight premium to the other similar-sized deal of 2010, the FXCM-ODL acquisition:
Note that Deal-size-to-Volume is a millions to billions-per-month comparison.
In comparison to public market valuations, however, these acquisitions are being completed at a vast discount to the multiples at which firms such as FXCM, Gain Capital and IG Group are traded – see LeapRate’s Forex Industry Report for more information on financings, M&A transaction lists, and valuations of Forex industry companies.
Swissquote also made a smaller acquisition in 2010, introducing broker Tradejet AG, for cash consideration of CHF 3.65 million ($3.8 million).