New York-based Investment Technology Group (ITG) has entered into a definitive agreement to acquire Boston-based Macgregor, a privately-held provider of trade order management technology, in a cash deal worth $230 million.
ITG, a provider of technology-based equity trading services, says the transaction will be accretive in the first quarter of 2006.
Founded in 1991, Macgregor employs 190 staff at its Boston headquarters and offices in New York, London and Madrid. The company's client base consists of more than 100 buy-side institutions and 270+ sell-side customers.
Macgregor's co-founders Steven Levy and Rolando Rabines have been hawking the business to potential buyers for some time. Alongside ITG, SunGard Data Systems was also rumoured to be in hot pursuit.
Private equity firms Bain Capital, Commonwealth Capital and the Audax Group own 43% of Macgregor. Bear Stearns acted on behalf of Macgregor, while San Francisco boutique Financial Technology Partners advised ITG on the sale.
Commenting on the acquisition, Ray Killian, ITG's chairman, president, and CEO, says: "We are responding to the requests of our customers to seamlessly integrate execution and order management technologies to create a unique and highly differentiated 'best-in-class' solution spanning portfolio management, compliance, execution, operations, analytics and a financial services network."
He adds: "This acquisition provides us with a deeper product set, recurring revenue and continued overall diversification."
It's estimated that 85% of Macgregor's $50 million in annual revenues are "recurring" from software licenses, shared commissions, and connectivity fees. Last year the firm nearly doubled pretax profits to $16 million.
ITG says that by combining its own technology with Macgregor's, it will be able to provide clients with a best-execution order management system that will closely integrate real-time data, analytics, order management and execution tools. The combined system will also position ITG and Macgregor to develop multi-asset class products.
The acquisition additionally gives ITG it's first foot-in-the-door at roughly a third of Macgregor's US client base.
ITG insists customers will continue to have the choice of trading through any broker or venue.
The transaction is expected to close in 60 to 90 days and is subject to customary closing conditions.