DEGIRO Acquisition: Key Details, Impact, and What Comes Next

In a significant move within the online brokerage industry, flatex AG has acquired DEGIRO B.V., aiming to establish itself as the leading pan-European online broker. This acquisition, valued at EUR 250 million, is expected to expand flatex's reach to over 15 European countries, serving more than one million customers and handling over 35 million transactions annually.

What Is DEGIRO?

Founded in 2008, DEGIRO offers online stock trading services with access to over 50 exchanges across 30 countries. Its core products include an innovative investment platform featuring real-time quotes, interactive graphs, and ESG ratings. DEGIRO stands out in the market with its incredibly low fees, strong security measures, and a transparent fee structure. The platform is tailored for different levels of investors, from beginners to experts, and has received over 100 international awards for its services.

Who Acquired DEGIRO?

flatexDEGIRO is a leading European online brokerage firm, recognized for its rapid growth and significant market influence. The company operates key platforms such as flatex, DEGIRO, and Vitrade, catering to various segments of the market. Serving over 2.7 million customer accounts across 16 countries, flatexDEGIRO handles 57 million transactions annually with a transaction volume of around 300 billion euros. Its high material equity return of over 60% underscores its efficiency and effectiveness in the financial services sector.

When Was DEGIRO Acquired?

flatex AG announced its acquisition of DEGIRO B.V. on December 16, 2019, with the transaction closing by August 1, 2020. This acquisition occurred during a period of heightened market volatility and increased trading activity, driven by global economic uncertainties and digitalization trends. The move positioned flatex as a leading pan-European online broker, capitalizing on industry shifts towards consolidation and technological advancements.

Why Was DEGIRO Acquired?

• Market Expansion: The acquisition of DEGIRO enables flatex to operate in over 15 European countries, significantly expanding its market presence. This strategic move is expected to serve more than 1.2 million customers and handle up to 50 million transactions annually, positioning flatex as the leading pan-European online broker.
• Technology Integration: flatex benefits from DEGIRO's efficient trading engine and the integration of cash accounts for DEGIRO clients at flatex Bank. This merger leverages flatex's full banking license and DEGIRO's advanced technology, providing clients access to a statutory deposit insurance scheme and enhancing the overall technological capabilities of the combined entity.
• Competitive Advantage: The acquisition strengthens flatex's position against competitors by creating significant synergies, expected to generate over EUR 30 million annually. The combined entity's modern, self-developed technology and competitive pricing further enhance its market position, making it the largest and leading independent pan-European online broker.

Acquisition Terms

• Acquisition Price: EUR 250 million on a cash and debt-free basis.
• Payment Method: The transaction was financed through a combination of a capital increase against contribution in kind, issuing up to 7.5 million new flatex shares, and a cash component of up to EUR 60 million.
• Key Conditions or Agreements:
  • flatex initially acquired a 9.4% stake in DEGIRO directly upon signing the contract.
  • The acquisition of the remaining 90.6% was subject to the approval of the relevant regulatory authorities.
  • Regulatory approval from De Nederlandsche Bank (DNB) was required and obtained.
  • flatex CEO Frank Niehage joined the DEGIRO supervisory board.
  • Both companies and brands, DEGIRO and flatex, continued to operate within the flatex group post-transaction.
  • The transaction was fully supported by DEGIRO’s management.

Impact on DEGIRO

The acquisition of DEGIRO by flatex AG brought significant changes to its operations and management. DEGIRO was legally merged into flatexDEGIRO Bank AG, simplifying group structures and reducing regulatory complexity. The leadership team saw new appointments, including Muhamad Chahrour as CEO, while former branch managers Esmond Berkhout and Peter Verberne departed. This restructuring aimed to streamline operations and accelerate international growth, leveraging the combined entity's strengths to enhance market presence and operational efficiency.

Product offerings and services also saw notable enhancements. DEGIRO customers gained access to cash accounts at flatex Bank, benefiting from a statutory deposit insurance scheme. New product and service offerings were introduced, improving service efficiency and capabilities. Employee reactions were generally positive, with expanded development opportunities for over 800 employees. Customer growth was evident, with DEGIRO gaining 250,000 new clients since the acquisition announcement, reflecting a favorable reception. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring smooth and efficient transitions.