Shares of TradeStation Group Inc. (NASDAQ: TRAD) touched a new 2-year high of $9.70 on Thursday. Japanese online brokerage Monex Group said Wednesday it agreed to acquire U.S. peer TradeStation for about $411 million to gain a foothold in the world's largest equities market.
The Plantation, Florida-headquartered online brokerage said its shareholders will receive $9.75 in cash for each share, which represents a 32 percent premium to TradeStation's closing stock price on April 20, from Monex, which is Japan's No.2 online broker by the number of accounts.
Pursuant to terms, Monex will commence a tender offer for all of the outstanding shares of TradeStation by May 10. If the tender offer is successfully completed, the parties expect the transaction to close early in the 2011 third quarter.
The move overseas comes as Monex and other Japanese online brokers struggle amid bleak growth prospects due to the sluggish economy and shrinking population, as well as tough price competition, according to a Reuters report.
"Through this acquisition, we expect TradeStation and Monex to complement one another via cross-utilization of technological development capabilities, customer and revenue bases. We have enough cash for this acquisition and we see no impact on our financial health from this," said Oki Matsumoto, Chief Executive Officer of Monex.
J.P. Morgan is acting as financial advisor and Bilzin Sumberg Baena Price & Axelrod LLP is acting as legal counsel to TradeStation on this transaction. Deutsche Bank is acting as financial advisor and Simpson Thacher & Bartlett LLP is acting as legal counsel to Monex.
Meanwhile, law firms Rigrodsky & Long P.A., Levi & Korsinsky LLP, Jonathan M. Stein P.L., Robbins Umeda LLP, and Brodsky & Smith LLC announced separately their investigation of potential claims against the board of directors of TradeStation Group concerning possible breaches of fiduciary duty and other violations of law related to the company’s entry into an agreement to be acquired by Monex Group.
The investigation concerns whether TradeStation’s board failed to adequately shop the company before entering into this transaction and whether Monex is underpaying for TradeStation shares, thus unlawfully harming TradeStation stockholders.
The transaction, which may undervalue TradeStation contains various deal protections, including a “top-up option” granting Monex the right to purchase additional shares at the offer price. Of particular interest, over the past six months, TradeStation shares have increased over 40 percent from October 21, 2010 to April 20, 2011.
TradeStation stock gapped open sharply higher April 21 at $9.69 compared to previous day's close of $7.41. The stock touched a new 52-week high of $9.70 on Thursday.
The stock closed Thursday's regular trading up 30.77 percent at $9.69 on the NASDAQ Stock Market with a record volume of 31.68 million shares. The stock traded between $5.22 and $9.70 during the past 52 weeks.