CFDs broker Plus500 Ltd (LON:PLUS) today announces that it has conditionally agreed to acquire all of the membership interests of Cunningham Commodities LLC, a regulated Futures Commission Merchant (FCM), and Cunningham Trading Systems LLC (CTS), a technology trading platform provider, operating in the futures and options on futures market in the United States.

Plus500 explains that the deal allows it to instantly expand its geographic footprint and product offering in the significantly growing, but under-penetrated, US retail trading market in futures and options on futures. The acquisition is expected to:

•  Deliver a substantial opportunity for Plus500 to leverage its best-in-class technology to enable market access to the millions of US retail investors looking for new trading opportunities;
• Ensure immediate access to, and the requisite licenses to operate in, the sizable and growing US market, where the Company does not currently operate or have a presence;
• Expand Plus500’s product offering into the US, with the Group entering the growing futures and options on futures market for the first time, diversifying its sources of revenue;
• Represent another step in Plus500’s transition towards becoming a global, multi-asset fintech group; and
• Align with the Group’s strategy of accessing future growth through organic investment in its technology as well as targeted bolt-on acquisitions.

The acquisition consideration of approximately US$30m will be funded from Plus500’s existing cash balances and paid on completion, subject to certain adjustments. Portions of the consideration are to be held in escrow for two years from completion of the Acquisition, for retention purposes.

For the year ending 31 December 2020, Cunningham generated gross revenue of approximately US$19m and profit before tax of approximately US$0.6m, with gross assets of approximately US$70m, and brings with it a scarce and valuable license to operate in the futures and options on futures market in the US.

The Acquisition is expected to be earnings accretive in its first full year and is expected to be completed during Q3 2021, subject to the receipt of certain regulatory approvals and other closing conditions.

David Zruia, Chief Executive Officer of Plus500, commented:

“We are delighted to announce Plus500’s first acquisition and first entry into the US market. With a combination of Plus500’s best-in-class technology and Cunningham’s and CTS’s existing infrastructure, we expect to develop and scale the business in the growing US market and deliver long term shareholder value.

“The acquisition represents an important strategic step for Plus500 as we continue to transition into a global, multi-asset fintech group. Our long-term ambition is to enable simplified, universal access to financial markets, and I’m excited that we have taken a further step toward achieving this today.”

Bill Cunningham, Andrew Busby and Nate Ostrye, the founders of Cunningham and CTS, commented:

“We are very pleased to become part of Plus500, given its focus on technology and innovation and its strong track record of growth, as we look to grow and enhance Cunningham and CTS over time. We are looking forward to a successful future together as we take the businesses to the next level of their development.”