IG Group says agrees to buy US-based Hedgestreet for 2.9 mln stg cash, shares

IG Group Holdings Plc (IGG.L) said it agreed to buy the entire issued share capital of HedgeStreet Inc. for $6.0 million, or approximately £2.9 million.

IG Group said that about half of the consideration may be satisfied by the issue of IG shares, while the remaining in cash. The consideration mix will be determined prior to completion of the acquisition, which is expected to be within 21 days.

U.S-based HedgeStreet, which has operated the HedgeStreet Exchange, has liabilities of approximately $1 million and operating costs of approximately $325,000 per month. Currently, the company is not generating any revenue.

Commenting on the acquisition Tim Howkins, Chief Executive Officer, said, “Our acquisition of HedgeStreet represents a further step in our strategy of geographic expansion and, after some further development work, will give us the ability to offer the US market an innovative range of products. This project is likely to take some time to come fully to fruition, and the extent of its success will depend on how broad a range of contracts we are able to develop within the constraints of the US regulatory environment.”.

IGG.L is currently trading at 386 pence, down 3.75 pence or 0.96%, on a volume of 243K shares.

Note – The CFTC had minimum capital requirements, which HedgeStreet was not able to sustain. They were burning $1m a month on 5k-10k of revenue, then tightening and tightening… There was just no money left so selling-off was inevitable.