TradeStation the large US multi-asset broker which only recently entered the retail forex space is about to be acquired by the Japanese Monex Group for $411 million.
This is a very interesting step as recently we’ve seen a flurry of transactions of foreign brokers buying Japanese forex brokers (Alpari, FXCM and Ava FX the most recent) amid the latest leverage reductions and tough economic climate in Japan. There are many more Japanese businesses looking to be sold as Japanese market is much larger in terms of number of market participants and hence consolidation is much faster and aggressive there than elsewhere. This move by Monex Group however makes a lot of sense as profits in Japan fall and can only be balanced by either consolidating locally or expanding overseas. TradeStation, a relatively small broker, is certainly an attractive target and is now in a poll position with its unique trading platform to expand in the US retail forex market as well.
Some data about Monex:
FX Volume – $120M a day
FX Clients – 120,192
Income $240M, profit $55M – including FX, Stocks, Bonds, etc
It’s amazing to see how on almost the same number of clients as FXCM an Japanese broker is making 1/100 volume. Average Japanese ‘trader’ trades about 0.01 lots a day while average western client trades about 0.8-1.0 lots a day.
“Monex Group Inc. (8698) said Thursday it had reached an agreement with TradeStation Group Inc. to acquire the U.S. online brokerage for about 411 million dollars (33.9 billion yen). A U.S. subsidiary of Monex Group will make a tender offer of 9.75 dollars a share for the company listed on the Nasdaq stock market as early as later this month, with the aim of turning it into a wholly owned unit. The expected purchase price is a 39% premium on the average stock price of TradeStation Group over the past three months. Monex Group plans to use cash-on-hand and bank loans to buy the U.S. firm. Monex Group is stepping up its overseas operations in a bid to expand earning sources, as stock transactions by individual investors in Japan remain sluggish.
Shares of Monex slumped 2.1 percent to 16,700 yen, reflecting investor worries over the financial burden. ”We have enough cash for this acquisition and we see no impact on our financial health from this,” Monex Chief Executive Officer Oki Matsumoto said at a briefing. TradeStation is one of the six publicly traded online brokers in the U.S. and caters mainly to individual investors, with 48,000 accounts, Monex said in a statement.”