Lightspeed Financial Buys Terra Nova For $27.6M
By Jacob Bunge Of DOW JONES NEWSWIRES
Lightspeed Financial Inc., a brokerage and trading technology company, on Tuesday said it planned to acquire rival Terra Nova Financial Group Inc. (TNFG) for $27.6 million in a move that will swell Lightspeed's base of retail and hedge-fund customers.
The move extends Lightspeed's string of acquisitions as it seeks to position itself as a central provider of trading services to individual traders and technology-powered firms. Buying Terra Nova is expected to boost the company's total client assets to $1.25 billion.
"In the brokerage business, it's a game of scale," said Lightspeed Financial Chief Executive Stephen Ehrlich, in an interview.
The transaction brings together two similar companies. Both aim their brokerage and market-access services at what are known as active traders, a group that includes retail investors as well as computer-driven proprietary trading firms and small to mid-sized hedge funds.
Buying the Chicago-based company will bring more derivatives-minded customers to Lightspeed, as Terra Nova clients tend to do more trading in options and futures, Ehrlich said. It also opens up a new potential customer base for Lightspeed's menu of technology tools.
Adding Terra Nova's business will bring Lightspeed's total client base to more than 5,500 traders, seen buying and selling an average 150 million shares each day, according to the companies.
Lightspeed will make an initial cash payment of $22.6 million to secure the Terra Nova deal, with a second $5 million payment due within six months of closing, expected in the third quarter. The transaction requires approval by regulators and Terra Nova shareholders.
The move extends a run of deals for Lightspeed, which earlier this year bought NobleTrading, a New York-based trading company focused on the retail market. In the last few years, Lightspeed has also acquired Schonfeld & Co. LLC and Integrity Trading Inc.
Ehrlich, who led the management buy-out that formed Lightspeed from E*Trade Financial Corp. (ETFC) in the summer of 2006, said the company is pursuing its consolidation agenda with its own funds and investments from private-equity firms.
"When we set out [from E*Trade], this was part of our strategy, to grow through acquisitions," Ehrlich said.
Lightspeed continues to seek targets in the U.S., he said, but is also eyeing expansion into foreign markets and new asset classes.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com |
