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Acquisitions | 12 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions The Company’s consolidated financial statements include the operating results and cash flows of the acquired businesses from the dates of acquisition. Subsequent Acquisition Cotton Distributors Inc. On October 31, 2022, the Company’s wholly owned subsidiary, StoneX Netherlands B.V., acquired CDI-Societe Cotonniere De Distribution S.A (“CDI”), based in Switzerland. CDI operates a global cotton merchant business with clients and producers in Brazil, West Africa, and buyers in the APAC region. The purchase price is approximately $40.0 million, which is CDI’s estimated tangible book value. Acquisitions in Fiscal 2021 Chasing Returns Ltd. On August 3, 2021, the Company’s wholly owned subsidiary, StoneX Netherlands B.V., acquired Chasing Returns Limited, a Company based in Ireland, which specializes in financial behavioral science designed to assist traders in analyzing trends and decision making. The Company intends to use Chasing Returns Limited to enhance the Company’s offerings to its retail clients. The estimated purchase price is approximately $6.0 million, all of which was excess purchase price over net assets acquired. The Company recognized $2.4 million in acquired intangible assets, classified as software, and $3.6 million in goodwill. EncoreFx Ltd. Effective December 22, 2020, the Company acquired EncoreFx Inc., which is incorporated in the State of Washington, and is registered as a Money Services Business with FinCEN, having 33 state money transmitter licenses and whose primary operations include providing foreign-currency exchange risk management and global payment solutions services to small and medium sized businesses. The terms of the agreement included cash consideration of $0.9 million. The transaction was accounted for as an asset acquisition. The excess of cash consideration over the asset and liabilities assumed of $0.5 million was allocated to an indefinite lived intangible asset recognized related to the licenses acquired. The intangible asset has been assigned to the Global Payments reportable segment. Subsequent to the acquisition, the company was renamed as StoneX Payment Services Ltd. Acquisitions in Fiscal 2020 Gain Capital Holdings, Inc. In February 2020, the Company entered into a definitive merger agreement to acquire Gain for $6.00 per share in an all-cash transaction. The merger closed on July 30, 2020 (“the Gain acquisition date”) subsequent to approval by Gain’s shareholders, approval by regulators, and the completion of customary closing conditions. Purchase Price The aggregate merger consideration was (in millions):
Aggregate cash consideration | $ | 215.0 |
Accrual for merger cash consideration | 21.6 |
Total merger consideration | $ | 236.6 |
Subsequent to the Gain acquisition date, holders of 3.6 million shares of Gain common stock outstanding at the Gain acquisition date who did not vote to approve the merger (“Dissenting Holders”, and the shares held by such Dissenting Holders, the “Dissenting Shares”) purportedly demanded appraisal rights pursuant to Section 262 of the Delaware General Corporation Law in the Court of Chancery of the State of Delaware. The $21.6 million accrual for merger consideration included in the aggregate merger consideration was based upon 3.6 million Dissenting Shares assuming a right to receive $6.00 per share at the Gain acquisition date. Any subsequent settlement with the Dissenting Holders will be considered the settlement of a post-acquisition contingency to be included in the Company’s post-acquisition Consolidated Income Statements. Purchase Price Allocation The consolidated financial statements were prepared using the acquisition method of accounting under U.S. GAAP with the Company treated as the acquirer of Gain for accounting purposes. Under the acquisition method of accounting, the aggregate merger consideration was allocated to the assets acquired and liabilities assumed generally based on their fair value at the Gain acquisition date. The Company made significant estimates and assumptions in determination of the fair value of assets acquired and liabilities assumed based upon discussions with management and informed insights into the industries in which Gain operates. These significant estimates and assumptions included, but were not limited to, projected cash flows of the acquired business, client attrition rates, discount rates, royalty rates, and economic lives of the identified assets. The Company engaged a third party valuation specialist to assist with the assessment of the overall reasonableness of the bargain purchase gain as further discussed below and determination of the fair value of the net identifiable assets acquired. The allocation of the purchase price to the fair value of assets acquired and liabilities assumed is considered final as of September 30, 2021. The following table summarizes the purchase price allocation as of the Gain acquisition date (in millions):
| Purchase Price Allocation
Cash and cash equivalents | $ | 507.2 |
Cash, securities and other assets segregated under federal and other regulations | 497.4
Deposits with and receivables from broker-dealers, clearing organizations, and counterparties (1) | 249.7
Receivables from clients, net (2) | 2.0
Income taxes receivable | 0.4
Deferred income taxes, net | 23.0
Property and equipment, net | 6.1
Right of use assets, net | 15.0
Other assets | 17.9
Total fair value of tangible assets acquired | 1,318.7
Accounts payable and other accrued liabilities | 49.4
Operating lease liabilities | 15.0
Payable to clients | 863.4
Payable to broker-dealers, clearing organizations, and counterparties | 0.5
Income taxes payable | 12.4
Convertible senior notes (3) | 92.0
Total fair value of tangible liabilities assumed | 1,032.7
Fair value of tangible net assets acquired (4) | 286.0
Identifiable intangible assets acquired |
Trademarks/domain names(5) | 3.7
Software programs/platforms(5) | 22.2
Customer base(5) | 9.8
Total fair value of intangible assets acquired | 35.7
Fair value of identifiable net assets acquired | 321.7
Total merger consideration | 236.6
Bargain purchase gain | $ | 85.1 |
(1) Amount represented the contractual amount of deposits with and receivables from broker-dealers, clearing organizations, and counterparties considered collectible as of the Gain acquisition date. (2) Amount represented the contractual amount of receivables due from clients for trading activity considered collectible as of the Gain acquisition date. (3) As $91.5 million of the $92.0 million in aggregate principal of the Gain Notes were redeemed on September 1, 2020, the Company believed that the face value of the Gain Notes approximated their fair value as of the Gain acquisition date due to the fundamental change right provided for in the Gain Notes indenture. Refer to Note 11 for further discussion of the Gain Notes redemption. (4) With the exception of deferred income taxes and the convertible senior notes, the Company believes that the fair value of the tangible assets acquired and tangible liabilities assumed approximated their carrying values as of the Gain acquisition date due either to their short-term nature, the Company’s ability to initiate the withdrawal and settlement of client related trading balances, or the fact that the balances are recorded at fair value on a recurring basis. (5) The trademark/domain names, software programs/platforms, and client base intangible assets were assigned useful lives of 5 years, 3 years, and 4 years, respectively. The Company believes that the transaction resulted in a bargain purchase gain primarily due to the significant market volatility experienced during the first calendar quarter of 2020, primarily as a result of the COVID-19 pandemic. The market volatility experienced during 2020 through the Gain acquisition date increased significantly compared to corresponding historical periods. This resulted in Gain generating windfall profits and a corresponding increase in net tangible book value. The bargain purchase gain is included in Gain on acquisitions and other gains on the Company’s Consolidated Income Statements for the fiscal years ended September 30, 2021 and 2020. Post-Acquisition Results and Unaudited Pro Forma Information Gain’s results of operations and cash flows have been included in the Company’s consolidated financial statements for the period subsequent to July 31, 2020. For the year ended September 30, 2020, the Company’s results include total revenues and net income from Gain of $49.0 million and $1.8 million, respectively. The following unaudited pro forma financial information (in millions, except per share amounts) has been adjusted to give effect to the Gain merger as if it were consummated on October 1, 2019.
| Year Ended September 30, 2020 |
Total revenues | $ | 54,414.1 |  |
Net income | $ | 138.5 |  |
Basic earnings per share | $ | 7.17 |  |
Diluted earnings per share | $ | 7.02 |  |
The unaudited pro forma financial information includes material, nonrecurring pro forma adjustments directly attributable to the Gain acquisition primarily including the adjustment for a goodwill impairment loss, adjustment for the bargain purchase gain, adjustments to the amortization of intangible assets, and adjustments for direct and incremental acquisition-related costs and the related tax effects. The unaudited pro forma financial information does not include any revenue or cost saving synergies from operating efficiencies or the effect of incremental costs incurred from integrating the companies. The Company incurred costs related to the merger of $5.2 million for the year ended September 30, 2020, that are included within Professional fees on the Consolidated Income Statement. The business acquired has been assigned to the Company’s Retail and Institutional reportable segments. UOB Bullion and Futures Limited In October 2019, the Company’s subsidiary StoneX Financial Pte Ltd completed its acquisition of the futures and options brokerage and clearing business of UOB Bullion and Futures Limited (“UOB”), a subsidiary of United Overseas Bank Limited. Closing. The cash purchase price for the acquired assets was $5.0 million. The purchase price allocation resulted in the recognition of liabilities assumed related to the futures and options on futures client account balances of approximately $351.8 million as of the acquisition date, which was recorded within Payables to clients on the Consolidated Balance Sheets, and an equal and offsetting amount of assets acquired. The carrying amount of the client assets and related liabilities was assumed to approximate fair value due to their short-term nature, the Company’s ability to initiate the withdrawal and settlement of client related trading balances, and the fact that the open derivative positions are recorded at fair value on a recurring basis. The Company also acquired certain client base intangible assets and property and equipment in connection with the acquisition. The Company engaged a third-party valuation specialist to assist with the valuation of the acquired intangible assets and property and equipment. As of the acquisition date, $0.8 million of the purchase price was allocated to the fair value of the property and equipment acquired and $3.1 million was allocated to the fair value of the client base intangible assets acquired. The remaining excess of the purchase price over the fair value of the net assets acquired of $1.1 million was allocated to goodwill. The Company believes the goodwill represents the synergies that can be realized from integrating the acquired business into its existing exchange-traded futures and option business. The allocation of the purchase price to the fair value of assets acquired and liabilities assumed was considered final as of September 30, 2020. The business acquired has been assigned to the Company’s Institutional reportable segment. The client base intangible assets were assigned a useful life of 5 years. UOB’s results of operations and cash flows have been included in the Company’s consolidated financial statements for the periods subsequent to October 7, 2019. For the year ended September 30, 2020, the Company’s results include total revenues and net loss from UOB of $10.3 million and $1.4 million, respectively. Tellimer In December 2019, the Company executed a definitive purchase agreement to acquire the brokerage businesses of Tellimer Group (“Tellimer”). This transaction involved the stock purchase of 100% of Exotix Partners, LLP, based in the United Kingdom, and the stock purchase of 100% of Tellimer Capital Ltd based in Nigeria. The closing of this transaction was subject to limited conditions including regulatory approval in the relevant jurisdictions. The cash purchase price was equal to the net tangible book value of the acquired entities upon closing. Regulatory approval for the acquisition of Exotix Partners, LLP, was obtained during the period with the acquisition closing on April 1, 2020. The cash purchase price for the acquisition of Exotix Partners, LLP, was $4.7 million. The allocation of the cash purchase price to the fair value of assets acquired and liabilities assumed resulted in the recognition of $1.0 million in cash and cash equivalents, $1.0 million in receivables from clients, net, $0.3 million in property and equipment, net, $3.4 million in other assets, and $1.0 million in liabilities assumed. The allocation of the purchase price to the fair value of assets acquired and liabilities assumed was considered final as of March 31, 2021. Regulatory approval for the acquisition of Tellimer Capital Ltd was obtained during the period with the acquisition closing on June 1, 2020. The cash purchase price for the acquisition of Tellimer Capital Ltd and the related allocation to the fair value of assets acquired and liabilities assumed was not material to the Company’s consolidated financial statements. Tellimer’s results of operations and cash flows have been included in the Company’s consolidated financial statements from the date of acquisition. For the year ended September 30, 2020, the Company’s results include total revenues and net loss from Tellimer of $5.9 million and less than $0.1 million, respectively. The acquired business have been assigned to the Company’s Institutional reportable segment. IFCM Commodities In January 2020, the Company’s wholly owned subsidiary, INTL Netherlands B.V., acquired 100% of the equity interests of IFCM Commodities GmbH (“IFCM”) based in Germany. The cash purchase price of $1.9 million was equal to net tangible book value upon closing plus a premium of $1.0 million. The excess of the cash consideration over the fair value of the net tangible assets acquired on the closing date was allocated to the fair value of IFCM’s client relationships. This client base intangible asset was assigned a useful life of five years. The allocation of the purchase price to the fair value of assets acquired and liabilities assumed was considered final as of December 31, 2020. IFCM’s results of operations and cash flows have been included in the Company’s consolidated financial statements for the periods subsequent to January 2, 2020. For the year ended September 30, 2020, the Company’s results include total revenues and net income from IFCM of $1.8 million and $0.5 million, respectively. GIROXX In May 2020, the Company’s wholly owned subsidiary, StoneX Financial Ltd, acquired 100% of GIROXX based in Germany. The cash purchase price for the acquisition of GIROXX was $4.4 million. The allocation of the cash purchase price to the fair value of tangible assets acquired and liabilities assumed resulted in the recognition of cash and cash equivalents of $6.5 million, property and equipment of $0.1 million, accounts payables and other accrued liabilities of $0.6 million, and payables to clients of $5.8 million as of the acquisition date. The Company acquired certain identifiable intangible assets in connection with the acquisition of GIROXX, primarily related to a business license permitting the Company to facilitate payment transactions in the European Union and certain proprietary developed software. The Company allocated $0.4 million and $1.5 million of the excess purchase price over net tangible assets acquired to the business license and proprietary developed software, respectively. The remaining excess purchase price over the net tangible assets acquired of $2.3 million was allocated to goodwill. The Company believes the allocation to goodwill represents the synergies that can be realized from integrating the acquired business into its existing Global Payments reportable segment. The acquired business license has been assigned an indefinite life and the proprietary developed software has been preliminarily assigned a useful life of 3 years. The allocation of the purchase price to the fair value of assets acquired and liabilities assumed was considered final as of June 30, 2021. GIROXX’s results of operations and cash flows have been included in the Company’s consolidated financial statements for the period subsequent to May 1, 2020. For the year ended September 30, 2020, the Company’s results include total revenues and net loss from GIROXX of $0.5 million and $0.6 million, respectively. The acquired business has been assigned to the Company’s Global Payments reportable segment. Asset Acquisitions Quest Capital In August 2019, the Company’s subsidiary, SA Stone Wealth Management, executed an asset purchase agreement to acquire certain client accounts of Quest Capital Strategies, Inc. The asset purchase agreement was subject to FINRA approval and other conditions to closing. FINRA approval was obtained and the other conditions to closing were fulfilled and the closing of the transaction occurred on December 9, 2019. The cash purchase price for the acquired client accounts was equal to $1.7 million. This transaction was accounted for as an asset acquisition at cost. The cash purchase price was allocated to the fair value of the client lists and relationships obtained and has been assigned, and will be amortized, over a useful life of seven years.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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