REUTERS – Thomson Reuters Corp (TRI.TO) (TRI.N) plans to buy electronic foreign exchange platform FX Alliance Inc (FX.N) for about $625 million in cash, the news and information group said on Monday, expanding the customer base of one of its key businesses.
Thomson Reuters is making a recommended offer of $22 per share for FXall, a premium of about 40 percent over Friday’s close of $15.70 on the New York Stock Exchange. According to Reuters data, that makes the deal worth $625 million.
Thomson Reuters provides liquidity in the interbank foreign exchange market and the deal will give it more access to the investment community as FXall’s customer base is predominantly on the buy side, including asset managers, corporations and hedge funds.
“This combination will enable us to provide our customers with integrated management of trades though the entire lifecycle,” said Abel Clark, managing director Marketplaces at Thomson Reuters.
According to the Bank of International Settlements (BIS), interbank dealing fell to second place in terms of foreign exchange turnover in 2010, overtaken for the first time by deals with other financial institutions, such as pension funds, hedge funds and insurance companies.
Those trades made up 48 percent of counterparty turnover in 2010 against 39 percent for traditional interbank deals.
More than $5 trillion are settled in foreign exchange and FX derivatives on average per day, according to the latest CLS settlement data.
FXall, which provides 24-hour access to forex markets five days a week, was founded in 2000 and listed on the New York Stock Exchange in February at $12 per share. Its shares rose as much as 20 percent on its market debut.
Last week, the company announced a record total average daily trading volume of $98.6 billion in June, a 10 percent increase on both the previous month and on June 2011.
FXall’s largest shareholder, Technology Crossover Ventures, as well as its Chairman and CEO Phil Weisberg and CFO John Cooley — who together own around 32.5 percent of its stock — have already agreed to tender their holdings. The board recommended other shareholders also sign up.
Thomson Reuters, which provides news and information to financial, legal, accounting and healthcare professionals, said it expected the deal to close in the third quarter.
Barclays is advising Thomson Reuters while J.P. Morgan is advising FXall.
(Reporting by Balaji Sridharan in Bangalore and Kylie MacLellan and Luke Jeffs in London; Editing by Jane Barrett)