Electronic trading major IG Group Holdings plc (LON:IGG) today announced the proposed acquisition of tastytrade, Inc., a high growth US online brokerage and trading education platform with a leading position in US listed derivatives.

Total consideration of $1.0 billion will be paid to tastytrade’s shareholders, comprising $300 million in cash and the issuance of 61.0 million IG shares, valued at $700 million. The cash requirement is to be funded by £150 million of new debt facilities with the balance from IG’s own cash resources.

Following completion of the acquisition, key tastytrade management shareholders, comprising Tom Sosnoff (Co-CEO, tastytrade), Kristi Ross (Co-CEO and President, tastytrade), Scott Sheridan (CEO, tastyworks) and Linwood Ma (CTO, tastytrade), will join the IG senior leadership team and continue in their current roles to help drive further growth in the business, and will collectively own approximately 5.7% of the enlarged share capital of IG.

June Felix, Chief Executive of IG, commented,

“I am thrilled to welcome tastytrade to the IG Group family. 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. The US market has more than 1.5 million retail traders and is the largest derivatives market in the world. tastytrade has grown impressively and proven itself to be an innovative market disrupter passionately committed to delivering for their clients.

The financial and strategic rationale underpinning this deal are compelling. I am confident that with our shared client-centric ethos, passion for innovation and growth, IG and tastytrade will prove a winning combination.”

Tom Sosnoff, Co-Founder and Co-CEO of tastytrade, commented,

“Early on we knew tastytrade was a very special company. While our long-term goal has always been to go global, we waited almost 10 years until we found the right partner and perfect match. Together we will focus on empowering the self-directed investor and change the way people perceive and engage with financial markets.”

Kristi Ross, Co-Founder and Co-CEO of tastytrade, commented,

“We created tastytrade with a vision to challenge self-directed investors to think and trade strategically. We built an ecosystem to empower them. No other firm has built a retail trader ecosystem in quite the same way: delivering authentic, fun and actionable research-based content through our uniquely developed financial media network; to our two revolutionary brokerage firms with intuitive front-end technology, built on high frequency middleware; to a retail-focused futures exchange. IG shares our mission, and similarly has a deep-rooted track record of innovation, leadership in the financial markets with a robust and scalable infrastructure, and most importantly, we share a customer-centric philosophy. We are excited to work with IG to make derivatives trading more accessible for retail investors around the world.”

For the financial year to 31 December 2020, tastytrade delivered revenue of $116.2 million (up 44% year-over-year), Adjusted EBITDA of $54.1 million (up 43% year-over-year) and profit before tax of $49.0 million (up 5% year-over-year).

On a pro forma basis, based on tastytrade’s unaudited financial results ended 31 December 2020 and IG’s unaudited results for the twelve months ended 30 November 2020, the US would have contributed 13% of IG Group revenue, compared to 4% on a standalone basis for the twelve months ended 30 November 2020.

IG says it is well on track to achieve its published target of generating an additional £100 million of revenue, to around £160 million, from the Significant Opportunities portfolio by the end of the financial year ending 31 May 2022. The Acquisition is additive to this target, and any revised guidance will be provided in due course following completion of the Acquisition.

Completion of the acquisition is anticipated to occur in the first quarter of financial year ending 31 May 2022, subject to satisfaction of customary conditions. These include receipt of relevant anti-trust and regulatory approvals from US regulatory bodies, including FINRA, as the Acquisition involves the acquisition of 25% or more of a registered broker-dealer.