Investors dumping LCG after takeover talks called off with City Index.
After falling Tuesday by 19% upon announcing it was no longer in active talks to be taken over, London Capital Group (“LCG”) saw its shares drop another 18% on Wednesday in trading on the London Stock Exchange. LCG shares now sit at £0.30, and actually set their 52-week-low yesterday — below the £0.34 range where LCG shares were traded before news of a potential takeover broke, as first exclusively reported by LeapRate.
Some quick math — at £0.30 per share, the market value of LCG is about £16 million (or about $24 million). Now LCG has, as of December 31, £22.2 million of cash (excluding of course client cash), and little-to-no debt. So, essentially, investors are valuing LCG at less that its cash-on-hand — or in other words, valuing the business as currently constituted and managed as worth less than nothing.
It seems as though the stock market does not have much confidence in the new CEO of LCG, Mark Slade. It was announced about two weeks ago that longtime LCG CEO Simon Denham would be stepping down, to be replaced by Slade. Slade was formerly MD of Refco Overseas — Refco was a major backer of FXCM before Refco went bankrupt in the mid-2000’s, almost taking FXCM down with it.
Will LCG indeed remain independent, and be steered back to profitability under Slade? Will LCG go back to takeover talks and get bought by one of Gain Capital (Forex.com), Cantor Fitzgerald, or City Index — each of which was involved at some level in M&A talks with LCG the past month –or another potential buyer? Stay tuned…
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