Headquartered in Chicago, Tastytrade has 105,000 active accounts trading mostly options but also futures and equities, and another 800,000 that watch its live online streaming of market commentary and trading strategies on its own website, YouTube, iTunes, Apple TV and elsewhere.
Paying US$300mln in cash, helped by a new £150m debt facility, and issuing Tastytrade’s owner-management 61mln shares, or a 5.7% stake in the enlarged group, the FTSE 250 company said the acquisition is expected to be “low single-digit accretive” to its adjusted earnings per share in the first full year after completion.
In the year to December 2020, Tastytrade generated revenues of US$116mln and adjusted EBITDA of US$54mln, with revenues growing at a compound annual rate of 49% over the past three years.
In a statement, IG chief executive June Felix said: “This acquisition will materially expand and scale our business in the US and see us further diversify into the exciting high growth market of US retail options and futures, a market which is adjacent to IG's core retail trading skill set.”
Felix also hailed the “outstanding performance” of the existing IG business over the first six months of its financial year to end-November, with profit before tax soaring 129% to £231.3mln on trading revenue up 67% to £416.9mln.
An interim dividend has been declared of 12.96p per share, in line with a year ago.
With active client numbers rising 55% to 238,600, and 64,000 new clients taken on during the period amid highly elevated financial market activity that has boosted its rivals too, Felix said: “As we enter the second half of the year I believe that we are better positioned than ever before to deliver sustainable value.”
Shares in the company dropped 4% to 863.5p by Thursday lunchtime, where they are up 25% over the past 12 months.
Broker Peel Hunt said the profits were "comfortably ahead of our forecast" and that it was a "significant acquisition" of a company that seems to lead with content which is similar to IG.
"We are currently forecasting PBT/EPS of £298m/65.1p, which compares to consensus of £287m, and we estimate our numbers like should move at least 10% higher on an underlying basis, before the inclusion of Tasytrade. IG was trading on 11x before any changes to numbers, yielding over 5%."
--Adds shares and broker comment--