GAIN Capital Holdings and GAIN GTX Bermuda, Ltd, an indirect subsidiary of the Company, referred to as GTX Bermuda, have entered into an Asset Purchase Agreement with Valaquenta Intellectual Property Limited (“Valaquenta”) and an Asset Purchase Agreement (the “Forexster Agreement”) with Forexster Limited, pursuant to which GTX Bermuda agreed to purchase from Valaquenta and Forexster the software and other intellectual property assets utilized to operate the electronic trading platform offered to customers in the Company’s GTX business.
Prior to the closing of the acquisitions, which took place on July 10, 2014, the Company had agreements with Valaquenta and Forexster granting it the exclusive right to use the intellectual property in the field of forex trading and non-exclusive rights to use the intellectual property for the trading of financial products in the fields of precious metals and hydrocarbons. Following the closing of the acquisition, GTX Bermuda has full rights and title over the intellectual property for the trading of currencies, commodities and all other financial instruments of any kind whatsoever.
GAIN Capital did not officially release this information at the time, however it has filed the details of the acquisition with the Securities and Investments Commission (SEC) in the United States during the course of yesterday afternoon, only subsequently releasing full information on the transaction that pursuant to the Valaquenta Agreement, GTX Bermuda paid Valaquenta $12.4 million in cash at closing. GTX Bermuda also agreed to pay Valaquenta contingent consideration in the event that GTX Bermuda or any of its affiliates in the future provide customers the ability to trade new types of financial instruments using the purchased intellectual property and the trading of such new products generates “Net Revenue” (as defined in the Valaquenta Agreement) in excess of thresholds set out in the Valaquenta Agreement.
GTX Bermuda’s obligations under the Valaquenta Agreement are guaranteed by the Company. Pursuant to the Forexster Agreement, the Company issued 861,935 shares of its common stock to Forexster as consideration for the acquired assets.
In connection with the closing of the acquisitions, GTX Bermuda also entered into a consulting agreement with Valaquenta and two royalty-free licenses with affiliates of Valaquenta for certain of their intellectual property rights.
GAIN Capital’s succession of merger and acquisition activity over the past year has spearheaded many subsequent purchases by large FX companies around the world, and with the company continuing its policy of generating economies of scale, it is well positioned for a strong global and domestic position as many of its compatriots pack their bags and exit the US market.