Britain’s IG to acquire tastytrade for $1 billion

LONDON: Britain’s IG said it plans to buy US trading plaform tastytrade for $1 billion, venturing into North America ater a stellar year for the new breed of retail investment brokerages.

Coronavirus-driven volatility has fuelled a surge in revenue and profit for IG and British rivals including CMC Markets and Plus500, while Robinhood.com and its app-based trading have risen to prominence in the United States.

IG, which dates back to 1974, said on Thursday that tastytrade shareholders will get $300 million in cash and 61 million IG shares, valued at $700 million, in the London-listed company’s biggest deal to date.

News of the planned acquisition, part of June Felix’s diversification strategy since becoming IG Chief Executive in late 2018, saw IG shares fall 2.3% by 0812 GMT.

The company, which also reported a 129% increase in first-half earnings, said it expected the deal would be low single- digit accretive to its adjusted earnings per share in the first full year ater closing.

Half of the cash portion of the purchase would be funded through company resources and the rest through new debt facilities, IG said.

IG’S expansion into the United States coincides with the arrival of President Joe Biden, who was sworn into office on Wednesday. Wall Street is awash with speculation about the kind of financial sector regulatory changes his administration might seek, while Janet Yellen, Biden’s Treasury Secretary nominee, has also raised the possibility of taxing unrealized capital gains.